Businesses face 60% increase in energy costs

The cost of energy is an increasing concern for businesses. Having seen energy costs leap 60% in the past year according to new figures which reveals the increasing pressure firms in the UK and many places around the world are facing in addition to economic uncertainty.

According to very recent data businesses now spend an average of 0.51% of their total profit on energy, a huge rise of 70% on 2010’s figures

Historically business could afford to largely ignore energy costs because they were so negligible in relation to profits. However with energy costs leaping up from 0.3% to .51% of turnover in just one year, this is no longer the case.

To better understand how the cost of energy has increased we can look at data from the U.S. Department of Energy (DOE) and the Energy Information Administration (EIA). Looking at the chart below you can see the price of gas and how much it has gone up since 1919 (the first year of available EIA statistics). You can see a low of $0.17/gallon in 1931 rise all the way up to $3.53/gallon in 2011.

If this trend continues, energy costs may soon hit 1% of total business revenues, a hugely concerning figure that should force businesses into acting fast.

Although the future is unpredictable, it is worth planning ahead. Businesses should therefore be sensible and think about cutting and offsetting costs when they have the opportunity. Switching suppliers, installing half hour meters or even just changing your tariff, can save a business an average of £946 a year.

The situation isn’t any better for homeowners, with the cost of household energy rocketing more than five times faster than household income since 2004/05, research suggests.