While oil and gas are different commodities, they are often extracted in the same regions. As such, wholesale gas prices in the UK have risen by roughly 50%–67% in early March 2026. For a UK service-based business — whether you’re in IT, finance or consultancy — this might seem like a “big picture” problem that doesn’t affect your day-to-day.
But behind the scenes, a major shift in how the UK gets its energy is changing the way your business operates. Here is how the UK Government is stepping in to keep the economy moving.
Where does our energy come from?
Since 2020, the UK energy mix underwent a significant transition. The UK used to rely heavily on fossil fuels to an increased reliance on Norwegian natural gas, American Liquefied Natural Gas (LNG), and domestic renewable generation.
Even though the UK buys more oil from the USA now, we are still “Price Takers.” This means that when the global price of oil rises, it’s more expensive for everyone. Even if our oil comes from a pipe in the North Sea, we still have to pay the high global price.
Government intervention: The “green levy” swap
When prices get too high, the market “fails” because businesses can’t afford to stay open. To fix this, the government has stepped-in with a major change to your energy bills. They have moved “Green Levies” (extra charges that fund renewable energy) off your business energy bill and onto general taxation. How? It artificially lowers the price of energy for your business. This is a form of government intervention to fix a market failure. By lowering your costs, the government is trying to stop cost-push inflation — where rising bills force you to raise your own prices, which then makes everything in the UK more expensive.
Why this matters for service companies
If you run a service business, your biggest worry isn’t just your own heating bill; it’s whether your customers have money left to spend. Aggregate demand (AD) is made up of consumption (C), investment (I), government spending (G) and net exports.
AD=C+I+G+(X−M)
With spikes in prices, people usually hold-off spending and wait for a fall in price to renew their confidence. By moving levies to taxes (regressive to progressive taxation), the UK Government is trying to protect consumer confidence. They want to make sure people still have enough “disposable income” to book your services rather than spending every penny on their energy bill.
The fiscal trade-off
There is no such thing as a “free lunch” in economics. By moving energy costs onto taxes, the government is using fiscal policy to prevent a recession.
The downside? As a business owner, you need to be aware that while your energy bill might be lower today, the government might have to find that money somewhere else later — possibly through higher general taxation in a few years.
