It will take time for the cost of electricity and gas prices to fall despite the drop in wholesale costs, an economic specialist has said.
Economic and Social Analyst with Social Justice Ireland Colette Bennett explained that part of the reason is how our energy is bought by suppliers. Energy companies like Electric Ireland or Bord Gais, she said, are not buying gas on the day they're selling it.
"They're basically playing it like the stock market, so they would've bought it a number of months ago in preparation for the winter," Ms Bennett said. "At that time, the price may have been a bit higher.
"And then we obviously had a milder winter than we anticipated, so they would still have a stock of the higher-priced energy.” According to Colette, we should expect to see a reduction in prices within the next quarter - but she adds that companies may keep prices high in an attempt to protect profit margins.
Read more: Social welfare Ireland: Two little known payments that could help pay your gas and electricity bills
“We've seen that there are record profits being made by energy companies during this crisis,” she said. “It's disappointing that there haven’t been interventions to stop that.”
When asked if we can expect a slowing in inflation now that the wholesale gas prices are falling, she said they are just one aspect of the core inflation that we’re seeing. “All the indicators are there that there has been a slowdown,” she said.
"The indications are that will continue. What we want to see is deflation, and we're unlikely to see that, for at least probably another year.
“What we don't want is for the rate of inflation to be baked in. We want to actually see a reversal of the inflation that's been in place, or that's been certainly happening since last October.
"So the war in Ukraine was accelerating certain aspects of the inflation that we're seeing, and particularly around energy costs.” She also expressed her opinion that Government policies that try to protect people from the cost of living crisis need to be very targeted at those who need them the most.
Ms Bennett also said investment in "sustainable, renewable, long-term and secure energy resources" would insulate us from any other price shocks or any other inflationary shocks. Renewable energy - particularly offshore wind energy - is what could be especially beneficial, as “a huge proportion could be harnessed off the west coast of the Atlantic where it’s extremely windy”.
When asked about when can we expect to see a reduction in our bills, a spokesman for Energia said: “At Energia, as part of our service and value commitment, we monitor wholesale electricity and gas prices on an ongoing basis, and we will continue to do so with any future changes to customer price being carefully considered.”
READ NEXT:
- Dublin jobs: Etihad Airways holding cabin crew recruitment day in the capital next week
Dublin economy stagnates with businesses 'feeling the pinch'
Fine Gael TD Damien English resigns over failure to declare ownership of a property
Funeral of Fair City's Carol Anne Lowe hears husband remember 'beautiful' wife
Popular Dublin restaurant to close after pandemic 'deals massive blow'
Sign up to the Dublin Live Newsletter to get all the latest Dublin news straight to your inbox.
