Crude Oil rose for a third day on forecasts Tropical Storm Gustav will strengthen as it enters the Gulf of Mexico, home to 26 percent of U.S. production. Gustav is expected to return to hurricane status before reaching Gulf platforms, according to Jim Rouiller, a senior energy meteorologist with Planalytics Inc., a forecaster based in Pennsylvania. U.S. gasoline inventories probably fell a fifth week, dropping 2.45 million barrels, according to a Bloomberg survey before today’s Energy Department report.   The threat of storms like Gustav will prevent oil prices falling further, so we see the market supported above $110 until the end of the hurricane season, said Ingrid Angermann, an economist at Dresdner Bank AG in Frankfurt. Crude oil for October delivery rose as much as $2.26, or 1.9 percent, to $118.53 a barrel on the New York Mercantile Exchange. It was trading at $118.13 at 1:40 p.m. London time. Prices are up 63 percent from a year ago. Futures have dropped 21 percent from a record $147.27 a barrel reached on July 11. Yesterday, oil rose $1.16, or 1 percent, to settle at $116.27 a barrel. OPEC, the producer of 42 percent of the world’s oil, should maintain output when it meets in Vienna next month to help curb prices, International Energy Agency Executive Director Nobuo Tanaka said.

Dollar Drop

The dollar fell from a six-month high against the euro, bolstering the appeal of commodities as a hedge. The dollar declined to $1.4764 per euro at 1:16 p.m. in London from $1.4653 in New York yesterday, when it touched $1.4571, the strongest since Feb. 14. Gustav was about 80 miles (125 kilometers) west of the Haitian capital, Port-au-Prince, and forecast to head into the central Gulf of Mexico by Aug. 31, the National Hurricane Center said in an advisory at 5 a.m. Miami time. Gustav has the potential to grow to a Category 4 hurricane with winds of at least 131 miles per hour by the time it enters the Gulf, said Planalytics’s Rouiller, whose clients include oil companies. Offshore fields in the Gulf of Mexico accounted for 26 percent of total U.S. crude production and 12 percent of natural gas output in April, according to data on the Web site of the government’s Energy Information Administration.

Marketing spend in the energy sector has swelled by more than 25% this year, coinciding with unprecedented increases in the price of fuel to consumers. The UK’s top six energy firms - British Gas, Npower, E.ON, EDF Energy, Scottish Power and Scottish and Southern Energy - collectively spent a record £58.5m on marketing from January and June, compared with £46.4m over the same period last year, according to Nielsen Media Research.According to comparison site uSwitch, the average increase in the cost of gas has been 28%, while electricity prices have shot up by 20%.  The escalation in marketing spend has been criticised by groups concerned by the price of fuel. A spokesman for the Child Poverty Action Group, said: ‘Pumping up the marketing budget while cutting social assistance to these households is adding insult to injury.’ Adam Scorer, a spokesman for Energywatch, noted a correlation between price hikes and marketing activity. ‘At a time when bad deals are set to get even worse, companies will make sure that consumers know about the limited competition in the market,’ he said. EDF defended its spending hike, saying energy had ‘moved from being a commodity to being a brand’, making marketing more important. The industry regulator, Ofgem, declined to comment, but said it was conducting an investigation into the commercial activities of energy firms and would publish its findings at the end of next month.

Commodity prices could be caught up in a storm as recent volatility continued yesterday.  Hurricane Gustav is threatening oil production in the Gulf of Mexico, and the potential disruption is starting to put upward pressure on oil and gas prices after recent falls.  Yesterday gas prices in Britain dived but oil rose. Low demand and healthy supply drove down gas prices to 49p per therm from Friday’s prompt price of 65p, which had been caused by a drop in flows into Scotland.  However a rebound in flows into Scotland over the weekend, as well as low demand for gas in the UK and in continental Europe, caused the 25% fall in price.  “Gas has come back and the Europeans don’t seem to want any,” said one trader.  “It’s low demand more than anything.” The price of gas on the forward market for this winter fell yesterday by about 5p to 96.5p per therm and summer 2009 slipped to 81.5p, as oil prices fell below $114 a barrel.  Oil fell as the dollar hit a six-month high against the euro after weak German data highlighted a flagging euro zone economy. Investors see oil, and other commodities, as less attractive as an inflation hedge when the dollar is strong. However Hurricane Gustav, a category one hurricane which is strengthening in the central Caribbean, is threatening to disrupt oil and gas output off the coast of America which caused an afternoon rise to $117 a barrel. “Short term trading on oil should now be dominated this week by tracking Gustav,” said Olivier Jakob, an oil analyst at Petromatrix in Switzerland. Forecasters are predicting the hurricane will enter the Gulf of Mexico as a major storm by the weekend. The Gulf is home to about 25% of American oil production and 15% of its natural gas output. One of the largest oil and gas producers in the region, Royal Dutch Shell, has said it would begin evacuating nonessential personnel from offshore facilities later today. The conflict in Georgia has so far had little influence on oil prices, despite some disruption to Azeri oil shipments through the country. Edward Meir, analyst at MF Global, said: “Energy markets have not yet focused on what this latest escalation could mean for a potential disruption in energy supplies. “Until we get better clarity on this latter issue, we expect the price reverberations from this situation to be relatively contained.” The former chief executive of BP, John Browne, yesterday predicted that oil prices would bottom out at $80-$100 a barrel. “It is difficult to see oil prices much below $100, so $80-$100,” Mr Browne said at the ONS oil and gas conference in Norway. “As a flow, predicting the ceiling is difficult.” Oil has fallen sharply from July’s record high of $147, on the back of falling demand, however it remains up 15% in 2008.

European carbon emissions prices hit a 1-month high on Wednesday on the back of rising oil prices and concerns over the Norwegian gas pipeline, traders said. December-delivery European Union carbon permits were up 44 cents or 1.9 percent at 25.20 euros a tonne, the highest level seen since July 25. “Oil’s firming on Gustav, and that’s pushing (carbon) prices higher,” said a broker at London-based Newedge. U.S. benchmark crude oil futures rose for a third straight session on Wednesday to above $117 a barrel on growing worries that Tropical Storm Gustav may threaten oil and natural gas installations in the Gulf of Mexico. “We’re also seeing a genuine bullishness in the energy complex following last week’s Norwegian pipeline news,” he added, referring to the closure of a North Sea pipeline following a gas leak. “This has huge effects on the UK as well as Europe in terms of spare gas supplies in the winter.” A rise in natural gas prices mean utilities capable of fuel-switching may opt to burn dirtier coal, which would require them to buy more CO2 permits to cover their increased emissions. “Plus we’re seeing good technical buying,” the broker added, noting the market is “trying to push towards the 25.30 (euro) level, which we see as the next resistance.”

Families are £2,500 worse off than they were last year as rising food, fuel, energy and tax bills have dragged disposable incomes to the lowest level since Labour came to power in 1997, a new survey suggests. The average family has £1,210 a month to spend after covering essential bills, down from £1,425 last year. This is the first time households have seen their disposable income fall in more than a decade. But despite the pressure on home-owners’ wallets, wages are rising slower than inflation, with one in three people getting no rise at all this year. The overall cost of essentials such as clothes, food, fuel and mortgages, have risen by an average of 8 per cent, the survey from uSwitch, the price comparison website, showed. This is far higher than the official inflation rate which in July rose to a 16-year high of 4.4 per cent. The price of food has rocketed by 25 per cent since last year, figures from supermarkets show, while unleaded petrol is nearly a third more expensive. The uSwitch site said that further price rises by energy companies could push gas and electricity bills for an average home up by 61 per cent to £1,467 by the end of the year. Rising taxes are also cutting the so-pending power of families, with tax and national insurance contributions accounting for more than a fifth of the average gross household income, the highest in nearly two decades. The average household pays £7,413 in tax each year, up from £7,010 last year. National insurance bills have jumped by more than £150 to £3,507 a year.

The drastic fall in households’ disposable income comes as Britain is on the brink of recession, with the prospect of thousands of job cuts. The economy stalled in the three months to June, official figures showed last week, as output failed to grow at all. Salaries are rising more slowly than inflation at 3.4 per cent a year. About 35 per cent of workers, nine million people , will get no pay rise this year. The Bank of England has forecast that the official measure of inflation will rise to 5 per cent before the year end. Public expectations about inflation also worsened in August. Responses to a LloydsTSB survey, seeking forecasts of inflation in 12 months, averaged 5 per cent, up from 4.8 per cent in July.

After facing enormous hikes in the fuel prices over the last few days by major companies, energy experts are encouraging people to seize the fixed rate tariffs introduced by the Scottish Power. After the abrupt increase in the prices of gas and fuel, Eon and SSE have risen to the third and fourth positions respectively, in the list of energy producing majors of the country. While Eon has hiked its annual gas tariff by 26% and for the electricity by 16% which sums up to a £234 hike on a yearly basis. Whereas SSE (Scottish and Southern Energy) has announced a 29 percent (£181) increase in the gas prices and a 19 percent (£78) boost in the electricity prices, which brings it to a total of £1,259 annually for an average house, which will be applied from 25th August, 2008. Nonetheless, the fixed rate tariff plan announced by the Scottish Power was a breather for the Britons, which will lock the prices until next year (October 2009), by £60. This would reduce the annual dual bill to £1,099, which is equivalent to the supplier’s quarterly bill tariff. However, the deal is still £250, i.e. approximately 30% more expensive than the Click energy 5 plan being offered by British Gas’s online, the cheapest one being offered in the country. It charges around £845 annually. Even though a decrease in the whole sale prices was observed in August, but due to the leaking of a gas pipeline in North Sea, a contrary 12 % increase was noted last week.

To compare fixed rate energy deals click here:

Household budgets are likely to be stretched still further with news that water companies intend to increase bills by up to 60 per cent over the next five years. This will push the average water bill of £300 up to almost £500.  For families struggling with rising food and fuel bills, there is a simple answer - cut down your water usage.

This may be easier than it looks. It is estimated that each person in Britain uses about 33 gallons of water every day. Experts say that many people could easily halve this usage. Here are six tips to get you started.

1. Install a meter

Most people pay a flat water rate, regardless of usage. Many households automatically save money just by switching to a meter, even before they start economising.

advertisementAs a rule of thumb, if you have more bedrooms than people in your home, you will benefit from going on to a meter, and could cut up to £125 off your annual bill.

Most households in Britain can have a water meter installed free of charge. Within the first 12 months, you have the right to ask your water company to switch you back to an unmeasured charge if you find you are not saving money.

However, if you aren’t eligible for a meter, your water company should offer you an “assessed charge” where you pay a bill based on an estimate of your usage, or what other metered customers pay in your area. See ofwat.gov.uk for details.

2. Drop a hippo in your cistern

As every flush of the lavatory uses nearly nine gallons of water, cisterns often account for more than 30 per cent of household water consumption.

A Hippo - a polyethylene block - in your cistern can cut that by an estimated three litres (0.6 gallon) per flush. They’re relatively inexpensive at £1.95 each; hippo-the-watersaver.co.uk or biggreensmile.com.

3. Don’t leave taps running

In one minute, a running tap can waste nearly two gallons. And it is not just tooth-brushers who are too blame. Don’t rinse fruit or vegetables under a tap -soak them in a bowl of water. Likewise, keep a jug of cold water in the fridge rather than running the tap until it goes cold.

4. Stop dripping

A leaky tap can waste more than 20 gallons a week. This can cost significantly more than a new 50p washer.

5. Buy water-efficient appliances

Dishwashers and washing machines account for 16 per cent of the water used in a typical household. New washing machines with an EU energy efficiency label can use less than 11 gallons of water per 13lb wash. And remember, a full load will need less water than two half?loads.

6. Take a shower

A five-minute shower uses a third as much water as a bath. Fitting a water-efficient shower head (available for about £40 from DIY stores) can further reduce your consumption by as much as 30 per cent.

Households are wasting hundreds of pounds a year on gas and electricity bills - despite Government efforts to cut energy consumption, the Whitehall spending watchdog has warned. The National Audit Office (NAO) said that while the Government is currently spending £2.6 billion-a-year on energy reduction programmes, household consumption has risen by 19% between 1990 and 2004. The increase came despite a 19% increase in household energy efficiency over the same period. While energy consumption has started to fall since 2005, the NAO estimated that households could cut average bills by at least 30% - around £280-a-year for the typical household - if they adopted all the available cost-saving measures. It pointed to recent surveys by the Energy Saving Trust which found that 71% of households leave electronic appliances on standby, 63% forget to turn the lights off in empty rooms, and 28% leave the heating on when the house is unoccupied. At the same time, the NAO said that as the growth in consumer electronics, the emergence of more and smaller households and the tendency of people to keep their homes warmer had all helped to offset the gains in energy efficiency. With household consumption accounting for around 30% of all UK energy consumption, the NAO said that reducing current levels was an important element of the Government’s policy for tacking climate change. However it expressed concern that non-compliance with new, tighter, building regulations could undermine the requirement for new homes to be more energy efficient. The NAO also cast doubt on the ability of industry to meet the required installation rates for loft and cavity wall insulation. Edward Leigh, the chairman of the Commons Public Accounts Committee which oversees the work of the NAO, said that the Government needed to gain a clearer understanding of how its energy reduction programmes work. “While three quarters of people say they are concerned about climate change, actions don’t seem to back that up,” he said. “About 70% of people leave their appliances on stand by, and almost two thirds of people keep lights burning in empty rooms. So there is a challenge to us all to be smarter in our use of energy. But there is also a prize. The average household could cut its annual household energy bill by almost £300 by being more energy efficient.”

UK gas prices at the National Balancing Point rocketed Wednesday on news that a large Norwegian field would be out of action for an undetermined length of time due to a pipeline leak, traders said. Winter 08 jumped an impressive 10 p to trade at 100 p/therm, before easing back a touch to 98.5 p/th by midday London time (11:00 GMT). Norway’s StatoilHydro said Wednesday that it had discovered a leak on the Kvitebjorn pipeline, and would have to shut the line pending repairs. The pipeline takes gas from the Kvitebjorn and Visund fields, and gas production from both would have to halt until repairs are complete. The fields were already offline Wednesday, because the Kollsnes processing facility that their gas production feeds into started its summer maintenance outage over a week ago. That also shut in gas production from the giant Troll field, which should be unaffected by the Kvitebjorn leak. But that outage is expected to end in the coming days.

The pipeline outage removes around 25 million cubic meters/day of Norwegian gas production, although the two fields rarely produce at full capacity. The bulk of that comes from Kvitebjorn, which can produce at around 20 million cu m/d. Traders said Wednesday that the outage could last through to the first quarter of next year, although the operator said the length of the outage was uncertain. That possibility had driven prices markedly higher, but the move was exacerbated by shorts being stopped out, traders said. One trader said that the market also seemed to have panicked, and may settle back down as the true impact of the outage becomes clear.

As well as Winter 08 jumping, Summer 09 was up 4.7 p to 84 p/th by noon, and Winter 09 was up 4.1 p to 101.5 p/th, despite the outage likely having no impact on supplies that far out. Several traders questioned whether the impact would in fact last as long as the winter, with one trader reporting seeing Norwegian producers buying the October contract but nothing beyond that.

October itself jumped just under 10 pence to hit 78.5 p/th by 12:00, and September was up 6 p to 58.25 p/th. Smaller moves were seen closer in, with working days next week up only 3 p, at 51.5 p/th, and the weekend up 4 p, at 55.5 p/th.

And despite the outage having no material impact on prompt supplies, given that the fields were already due to remain offline for a few days more, the near prompt also jumped on the news. Within-day was up 1.25 p to 56.25 p/th by midday, and day-ahead was up 2.25 p to 56.95 p/th. The prompt jump may also have reflected the fact that the system was fairly tight Wednesday, however. National Grid data showed demand at 218.7 million cubic meters/day at 11:00, 31.3 million cu m/d below seasonal norms, and a step up from the previous session. The system was fairly short at that time, by 8.2 million cu m.
 

U.K. wholesale natural gas for delivery this winter advanced as Brent crude oil jumped more than $6 a barrel. Gas for the six months through March 2009 increased 2 percent to 102.50 pence a therm as of 5:28 p.m. local time, according to Spectron Group Ltd. That’s equal to $19.22 a million British thermal units. A therm is 100,000 Btus. The contract earlier climbed to a record 109 pence after StatoilHydro ASA said it may halt gas exports from a North Sea field until spring. The price subsequently dropped 0.5 percent as BP Plc said its North Sea Bruce field resumed output, boosting supplies. The U.K. price is more than double the cost of U.S. gas. Brent crude for October settlement rose $6.36, or 5.6 percent, to $120.72 a barrel on London’s ICE Futures Europe exchange. Higher oil costs can push up some mainland European gas contracts, which affect the U.K. price because the country is connected to the continent by pipeline.

Gas prices doubled in the past year after U.K. North Sea production fell 9.5 percent, leading Britain’s six biggest energy suppliers to raise customer prices.