Gas and electricity prices set to soar

09 June 2008 / by Daniela Gieseler
Consumers will have to fork out even more for their gas and electricity bills in the coming years, energy comparison site TheEnergyShop.com has warned.

They estimate that domestic gas prices will take a leap of up to 43 per cent, and electricity bills will rise by 21 per cent. The average dual fuel bill is likely to increase by £360 a year to more than £1,400.

Joe Malinowski, TheEnergyShops.com's founder, said wholesale gas prices have risen above retail prices and that "The last time wholesale gas prices broke above retail gas prices was two years ago, in June 2005."

"In the following 18 months energy bills rose by a record 47 per cent. A very similar thing is going to happen this time around, except that the money value of the increase is going to be even higher."

The gloomy outlook comes as the cost of a barrel of oil hit a new high at $139 last Friday, entailing a rise of more than five per cent in the wholesale price of gas – meaning it went up 76 per cent from last year.

Energy companies insisted that they were forced to make the increases due to the high oil price, but consumer groups claim that the soaring prices are merely due to fuel producers' attempts to make huge profits at the expense of consumers.

Statements from OPEC, the oil producers' cartel, said there were currently no intentions within OPEC to increase oil supplies any further. Shokri Ghanem, a Libyan representative said: "I think it [the oil price] will go higher. That is a trend that will continue for some time. The easy, cheap oil is over, peak oil is looming."

British energy suppliers have already hiked their gas and electricity prices several times this year, and there might be more increases ahead. British Gas announced that it would increase its market tracker energy plan by 14 per cent.

This particular price increase is a good market indicator, explains Ann Robinson, director of consumer policy at uSwitch.com: "The British Gas Market Tracker plan tracks wholesale energy prices, so acts like an early warning system, alerting consumers to the pressures suppliers are under and the impact this could have on household energy prices."

"Consumers cannot afford to ignore these signs - they need to take action now to stand any chance of limiting the impact of higher prices. Online energy plans remain a good option for those who want to pay a lower price now and are happy to take their chances on the market in the future," Ms Robinson advises.

She continued to say that those who are more vulnerable to price rises, or who are already on a stretched budget, should consider a fixed or capped price plan to protect themselves against further rises. "These plans carry a premium, but should still work out cheaper than the plan you are currently on" she said, if a household has never opted to switch energy provider before.

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