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Recent Price Trend - Energy & Utility Consulting Services
During the three years to 2017, the price of energy and utility consulting services has risen steadily at an estimated annualized rate of 0.9%. Low price volatility is largely due to the diverse range of downstream markets, providing stable demand. It minimizes the risk of extreme price fluctuations and allows buyers to make more accurate price estimations and expense budgets.
Rising demand has been the primary cause of price growth in recent years. In particular, the industrial production index has grown. Growth in this driver indicates expanding production from the manufacturing, mining, electric and gas sectors. Firms operating in these sectors generally use considerable levels of energy throughout their operations, making energy costs a significant concern. As such, the increase in production has been encouraging industrial firms to seek ways to reduce their emissions and cut back on energy costs. These methods contribute to rising demand for this service. Additionally, the number of businesses has been rising due to the expanding economy. Growth in the overall number of businesses indicates a rising downstream market and wider pool of potential buyers. As such, the growth in the number of businesses also indicates rising demand, which has reduced the pressure on suppliers to lower prices in order to stay competitive. This, grants them greater pricing leverage and diminishing buyer power.
Up until 2014, the government was offering various tax rebate programs that rewarded companies for taking steps to reduce their energy consumption. The deadline to apply for many of these programs came at the end of 2013. As a result, buyers purchased these services at an accelerated rate in 2013, despite increasing prices. The end of these programs has resulted in waning demand entering the current three-year period. As such, the subdued demand has helped suppress price growth throughout the three years to 2017. Nonetheless, the rising price of energy and utility consulting services has encouraged buyers to enter contract agreements sooner rather than later to avoid paying higher prices.
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