Brexit influence on energy prices

As we draw ever closer to the EU referendum on UK Membership, the ‘IN’ and ‘OUT’ campaigns are in full swing, with daily updates on how the UK will fare if the public decide to leave the EU. Despite contrasting views on the price of food or the ranging views on the state of the Jobs sector or the economy as a whole, one thing we can be fairly certain on is the cost of energy.

When Boris Johnson nailed his colours to the mast and decided to front the ‘OUT’ campaign, markets reacted and the British Pound lost ground on the Euro reaching a low last seen towards the end of 2014, such is the popularity of the former Mayor of London the ‘OUT’ campaign received a notable boost. Therefore, if the ‘OUT’ campaign were to succeed and the British Public voted to leave the EU, it would be reasonable to predict the markets would react in the same way.

So how does that effect energy prices?

If the British Pound were to lose ground against the Euro, gas prices would shoot up considerably, as simply the cost of importing Gas from the continent would increase. As the UK imports a significant amount of gas from the continent, fluctuations in the currency market can heavily weigh on prices – as we have seen over the last month; during the period of Price Changes the key factor was Currency Volatility, along with other issues on the Oil Market.

In addition to Gas prices being affected, the UK’s Energy and Climate Change Secretary Amber Rudd, echoed a similar price uncertainty if the ‘OUT’ campaign were to win, when she stated on the 24th March, that the ‘UK would get a massive electric shock’ and that ‘costs are likely to rocket by at least half a billion pounds a year’.