#Resource Fossil Fuels # Octopus Energy explains Iran, global gas prices and your energy bills It is impossible to ignore the news regarding the war in Iran and other global conflicts. War in the Middle East has impacted the flow of oil and gas around the world, sending market prices rocketing up – and sadly Britain is still far too dependent on natural gas. Right now it’s costing us nearly 70% more to buy new gas than it did two weeks ago. Because gas sets the price for much of our electricity, wholesale power costs have jumped around 40% too. Even when that electricity is renewable (more on that below). As a result, our fixed tariffs for new customers today are more expensive and many suppliers have stopped offering fixed tariffs altogether. The good news: your prices are protected until 12 March 2027. When you fixed your tariff, we bulk bought the energy for your whole contract upfront. That means you’re sheltered from the recent price spikes for now. A few weeks before your tariff ends, we’ll send your options for the year ahead. Any fixed price options will reflect the real cost of buying energy that day — it changes frequently, especially during volatile periods like this. You’ll always have the option of Flexible Octopus, our variable tariff protected by the energy price cap. The cap won’t reflect the recent spike until July at the earliest, and Octopus has consistently priced below the cap. People understandably want to know what this means for energy prices long term. Nobody knows for sure. For so many reasons, we’re all hoping for a quick end to the conflict. If it ends quickly, wholesale prices could fall back just as fast. If it drags on, prices may stay elevated while countries compete to secure energy and fill gas storage for winter. And if bills rise significantly over time, the government has said it may step in with support. One thing is clear. We urgently need to reduce our dependency on imported gas. This latest bout of international turmoil is yet another reminder of why we must move away from volatile fossil fuels. If Britain ditches natural gas and electrifies everything, we can power our homes and businesses with cheap, home-grown energy where prices aren’t sent soaring by global conflict. But to be clear - it’s not binary. We will continue to use gas as a back up on windless days for a long time to come - but every turn of a wind turbine reduces the amount of gas we use. Many of our customers tell us that they feel more protected from fossil fuel shocks since investing in a heat pump, solar panels, or an electric car (and often save on bills by making the most of clean electricity with a smart tariff). We don't know what's going to happen next, but I can promise we'll keep you informed, we'll keep our prices fair and we'll keep fighting to cut the costs of energy for all British homes and businesses. Very best wishes, Greg Jackson Founder, Octopus Energy PS. Was this update helpful? I’d love your feedback. We’ll randomly choose 8 respondents to win a £512 credit to their Octopus account. Thumbs down Thumbs up PPS. Want to know why the war affects energy prices so much? The Middle East produces around 20% of the world’s oil and shippable gas. Oil and gas producers in the region – including the world’s biggest gas terminal in Qatar – have come under fire and stopped production. The Strait of Hormuz, where ships transport that gas around the world, is effectively a no-go zone. Millions of barrels have been barred from entering the global supply chain. Though the UK doesn’t buy a huge amount of gas from Qatar, the price of gas is set globally, so this massive supply shortage has shot the price up. This happens because the parts of the world that normally get their gas from Qatar will now pay huge prices to divert the supplies which would otherwise come here. This info is accurate as of 13 March – we’ll update on any developments on our blog. That’s just gas – why are electricity prices, even renewables, affected too? The UK energy price is set by an auction every half hour. In that auction, the highest price for any unit of electricity sets the cost we all pay. So even if only one unit comes from an expensive gas plant, all the other generators get that price. It’s just one crazy flaw of several - I explain more here.