This year, most of us will feel the impact of the increased cost of our energy bills. This has become a major issue all over the globe and has resulted in homes across the country struggling to pay for the energy they use. There are many reasons why energy prices have skyrocketed, with one of the main culprits being the pandemic.
More expensive bills to pay means less money left over for ourselves each month and can mean that our personal budget becomes more stretched than usual. If you find yourself with an emergency and can’t seem to find a way to pay for it – payday loans can help. Whether it’s a broken-down car or a faulty boiler, you can finance unprecedented emergencies with ease, paying funds back in affordable instalments. Below, we’ll look at the financial crisis in more detail, along with the impacts it will have.
What is the energy crisis?
The energy crisis that we’re currently experiencing refers to the increase in price that households and businesses are suffering. Energy prices are at an all-time high, for reasons which we will look at in more detail below, and the prices that our providers are paying to supply our energy have also increased exponentially. Therefore, as consumers, no matter which provider we use for our energy to power our homes and businesses, the price increase has been passed down to us. With the wholesale energy price increase, the price we pay has also shot up.
What causes an energy crisis?
There are many factors that can cause an energy crisis, from overpopulation to poor distribution systems and natural disasters, but in this case, the cause is fall-out from the global pandemic we’ve suffered for the past few years, as well as various political issues.
There is a soaring demand for energy as businesses try to recover from the pandemic, which pushes the prices up as a result. Cold weather throughout Europe has also put more pressure on supplies than usual – and this all leads to wholesale prices becoming more expensive.
The financial impact of the pandemic
Because of the covid-19 pandemic, this price increase will have a huge impact on homes that are already struggling. Many people have had to manage on the income that the Furlough scheme provided throughout the pandemic, which, although may have come to an end now, will have left homes barely being able to function, with little income left aside for anything other than bills.
In the worst cases, there are families around the country that will have lost jobs completely, bringing in no income or having to live on what the government provides through benefits. These price rises will have a massive, negative effect on homes that are struggling to exist on their income as it stands.
The financial impact on homes
As energy prices increase, families across the country will be looking for ways to save. More of us will be trying to use less energy, which could mean living in a cold, dark home. But it’s not just energy prices that are increasing, the cost of living is increasing too, with everything from food to petrol and services going up due to inflation.
People that rely on cars to get around could suffer due to increasing prices of petrol and could also be stretched to the point of struggling to feed themselves or their families. A lot of homes will be looking to cut their spending on non-essentials due to the overall increase in the cost of living – and it is easy to see that the worst of the impact will be felt in homes that have a lower monthly income.
Reducing the impact
Although prices are set to keep rising in line with the worldwide bounce back and economic recovery triggered by the pandemic, it is not all doom and gloom, and there are a few solutions that can help reduce the impact the energy crisis has on your home.
Although comparing and switching suppliers may seem pointless given that all prices are going up, there is over £100 difference between the highest and the lowest price tariff, so if you are beginning to struggle, looking at other providers may be beneficial.
If you are struggling to pay bills and you’re not sure where your payments are going to come from, contacting your energy provider is a great way of utilising the support they have in place for customers that need it most. There are also initiatives like the Warm House Discount that can benefit low-income families and the elderly by reducing energy bills substantially. The best way to get help with your bills is to reach out to your supplier.