Three Ways to Combat Energy Bill Rises Amid Iran-US War Price Hike Fears
Energy price rises are looming on the horizon, despite the best efforts of regulator Ofgem to stabilise costs for consumers. The escalating conflict between the United States and Iran has sent shockwaves through global markets, with Tehran's retaliatory strikes targeting multiple countries and creating turmoil across the Middle East. While the humanitarian and geopolitical consequences are severe, closer to home, UK households are grappling with very real concerns about the impact on their energy bills.
In the short term, there is some positive news for consumers. From April 1, the new Energy Price Cap imposed by Ofgem will see average gas and electricity bills fall by 6.7 per cent. For someone on a typical standard variable tariff, which over 60 per cent of homes use, this translates to an annual saving of around £117. However, this relief may be temporary.
Long-Term Risks and Economic Warnings
The conflict in the Middle East has experts deeply concerned about medium and longer-term energy bill spikes. Oil and gas supplies are at significant risk as key shipping routes for energy resources pass directly through conflict zones, making markets extremely nervous. The Office for Budget Responsibility has issued stark warnings about very significant impacts on the global and UK economies.
Analysts at investment bank Stifel predict that average energy bills could jump to £2,500 a year, representing an increase of approximately £1,000 for many households. This potential surge underscores the urgency for consumers to take proactive measures to protect their finances.
Three Practical Strategies to Mitigate Energy Costs
1. Ensure Your Tariff and Meter Readings Are Correct
First and foremost, make certain you are not overpaying due to incorrect billing. Submit meter readings regularly, perhaps once a month, and take photographs as evidence. Be alert to any unexplained spikes in usage. Modern smart meters automate this process, but vigilance remains key.
- Check eligibility for government support programmes, particularly if you receive benefits such as pension credit or universal credit. This year, the Warm Home Discount provided £150 to eligible households.
- Turn off appliances completely rather than leaving them on standby, which could save up to £50 annually.
- According to British Gas, lowering your thermostat by just one degree could save between £90 and £145 per year, equating to about 10 per cent of the average bill.
Rory Duff, co-managing director of renewable energy installer Hometree Finance, advises: With energy prices surging again, households should prepare for prolonged volatility. While global prices are beyond anyone’s control, families can take measures to keep their bills from spiralling. Small steps make a real difference.
2. Fix Your Tariff Quickly
The upcoming April price cap will remain in effect only until July. If you are not already locked into a fixed tariff beyond that date, act swiftly. Current market-leading deals include Outfox the Market at £1,509 annually, Fuse Energy at £1,515, and Eon Next at £1,543.
Price comparison website Uswitch estimates that savvy consumers could achieve savings of up to £250 per year by securing a fixed rate. Money Savings Expert recommends fixing for between 12 and 18 months to ensure price stability without being locked out of potential future rate drops should the market shift significantly.
3. Consider Investing in Oil Giants
For stock market-savvy consumers, purchasing shares in BP or Shell could provide a financial buffer. These oil majors pay dividends to investors, generating cash returns even if share prices remain static. BP shares currently yield more than 6 per cent in interest, typically higher than Shell, offering approximately £60 on a £1,000 investment.
Russ Mould, an analyst at broker AJ Bell, notes: BP and Shell are forecast to contribute between 10 per cent and 11 per cent of the total pre-tax profit that analysts expect the FTSE 100 to generate across 2026 and 2027. He adds that they are also expected to provide 11 per cent to 12 per cent of aggregate FTSE 100 cash returns through dividends and share buybacks.
The easiest way to purchase shares is to open an account with established retail stock brokers such as AJ Bell, Interactive Investor, or Hargreaves Lansdown.
Broader Economic Implications
Looking ahead, experts at Deutsche Bank warn of potential ripple effects, including higher interest rates and elevated wages. Analyst Sanjay Raja explains: For the Bank of England, with the 2022 energy shock still likely salient, fears of inflation persistence will likely increase should energy prices remain elevated. This could disrupt the UK's disinflation track meaningfully and raise concerns of second-round effects next year, including sticky inflation expectations.
Such developments could buoy wage settlements in the coming year, casting doubt on both the pace and scale of anticipated interest rate cuts. In this uncertain climate, taking control of your energy costs through informed decisions becomes more crucial than ever.
