Energy companies are struggling to stay afloat as gas prices continue to soar in time for winter.

Two energy companies, Utility Point and People’s Energy have collapsed, leaving around 570,000 customers without an energy supplier, and in need of a switch.

There are also fears that more companies could fold this week as the Government has been forced to hold crisis talks with companies.

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It is believed that the Government could be forced to bail out some companies during the winter as prices are predicted to rise.

But why is the price of gas rising and why is it causing companies to fold? Here's everything we know about gas prices rising and how it affects companies.

Why are gas prices so high and why are companies folding because of it?

Prices of wholesale gas are at a record high around the world as economies recover from the Covid pandemic.

According to Industry group Oil & Gas UK, wholesale prices for gas are up 250% since January, and have increased 70% since August.

High global demand, as well as maintenance issues and lower solar and wind energy output has pushed prices up.

In the UK, lower winds have meant less renewable energy is generated. There have also been outages at some nuclear stations and lower flows into the UK of natural gas from Norway.

Dermot Nolan, a former Ofgem chief executive, said the increases were the result of depleted stocks following a cold winter in 2020, as well as reduced supply from Russia, and increased demand for liquefied natural gas from the Far East.

Energy companies pay a wholesale price to buy gas and electricity, which they then sell to consumers. As in any market, this can go up or down. Prices typically rise in response to more demand for heating and people turning lights on earlier in winter.

But prices have sky-rocketed due to low gas storage stocks, high European Union carbon prices, low liquefied natural gas tanker deliveries due to higher demand from Asia, less gas supply from Russia than usual, low renewable output and gas and nuclear maintenance outages.

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