Energy News

Oil Price Surge Threatens UK Gas Markets

Thursday 07 May, 2008

By Dan Drage

Wholesale UK gas prices have soared this year and another raft of price rises is imminent.

The anticipated price rises, the second wave in under six months, are due to UK energy links with the oil market. The cost of crude oil reached a staggering $120 a barrel last week, up another 20% since the beginning of April.

The impact of exorbitant crude oil costs has resonated loudly against the liberalised UK energy market, where traders are adding a risk premium over concern that enough fuel will come to the country next winter.

Despite these fears, British Gas (www.britishgas.co.uk). offered their online customers a reprieve in the form of a reduced online tariff. The British Gas Click Energy 5 tariff is now the cheapest online tariff on the market.

Andrew Wright, Director of Markets at energy regulator Ofgem, had the following forecast:

‘The key driver here is economic growth in the Far East and while that remains strong it is difficult to see any short-term relief from high oil prices’

He continues:

‘I would take the very strong gas prices for next winter very seriously.’

Utilities providers buy much of the energy they need to supply their customers on forward contracts, and this year's rise in wholesale prices has not been passed on to most consumers yet. Unless there is a sustained decline in wholesale prices, gas and electricity bills will inevitably get bigger for everybody.

Chris Eagle, Commercial Manager at Energy Choices, has a big money saving message:

‘Online tariffs, paperless billing and direct debit payments are the way forward. If you want to save money, take an online dual fuel tariff and pay by monthly direct debits. All suppliers will allow you significant discounts if you opt for this method.’

Compare Gas and Electricity Prices and see how much money you can save.
Compare Energy Prices