The oil market has virtually always been liberalised. Until recently, gas and electricity were in the hands of monopolies but things are changing rapidly, to the extent that the European Union wants the markets to be freed up entirely.

The opinion of Henry Van Gael, Forex Dealer at Fortis Bank.

Lower prices, higher volatility
We have seen a recurring phenomenon in a large number of countries that have already liberalised their energy market: prices start to fall since in this way suppliers hope to gain market share, but as soon as the market stabilises prices start to increase again.

This has been the case in Germany, the English-speaking countries, Scandinavia, etc. Once liberalisation has occurred, energy prices come under the direct impact of oil prices on the world market. As a result, prices are so volatile that energy suppliers refuse to guarantee prices over period of one, two, three or four years.

In the UK, large consumers no longer even obtain a guaranteed price for more than six months. So it is hardly surprising that companies that use a lot of energy wish to cover themselves. It was in response to this need that we set up a new product that we call the Energy Swap.

Simplicity itself
The bank and the customer agree a fixed price for a predetermined period. During this period, the customer buys energy from the supplier of their choice and pays for it at the market price. At the end of the period, the average market price is compared to the agreed price. If the market price is higher than the agreed price, the bank reimburses the customer with the difference. If the market price is lower than the agreed price, the customer pays the difference to the bank.

Not only for the largest companies
This new Fortis Bank product is of particular interest to larger companies whose energy bills account for 15% or more of overall costs. This does not necessarily mean large airlines or shipping companies. For instance, a road haulier with a fleet of 200 or 300 lorries will very quickly use 1,000 tonnes of diesel a month, which is the minimum volume required for an Energy Swap. Many companies involved in sectors that use a lot of energy - such as chemicals, transport, iron and steel - can benefit from our product. True, it is difficult to forecast energy prices and few companies are able to assign staff to consider this question.