New Year gloom as gas prices set to soar in 2008

03 December 2007
British consumers are to face a steep rise in the cost of their gas following wholesale gas price hikes which could see fuel costs rise 15 per cent higher by early next year, causing yet more misery for those already struggling to pay escalating winter fuel costs.

Analysts have warned that a 15 per cent increase in gas bills in the New Year is expected as suppliers begin to raise their charges from as early as February in line with rising wholesale gas prices.

The news follows last week's report from Gazprom, the Russian gas firm that supplies a quarter of Europe's gas, which indicated that consumers should expect prices to rise by almost a fifth.

This is the most recent in a number of increases that have seen UK gas costs rise by 50 per cent since 2004, with many consumers last year paying more than £1,000 for their fuel bills.

However, consumer groups have criticised the move saying that the industry is "tacitly colluding" in order to bolster the wholesale gas prices to justify the higher charges. Allan Asher, Chief Executive of Energywatch comments: "Warning of higher prices becomes a self-fulfilling prophecy. It's a way of softening the market ahead of a rise."

According to energy watchdog, Ofgem, power prices are likely to remain volatile and could rise from next year as new European Union environmental controls bite. Yet there are already around four million households living in fuel poverty as a result of sustained high energy prices.

A campaign run by Former Energy Minister, John Battle is currently lobbying parliament in a bid to ensure the Government uses its power to ensure all energy companies offer their poorest customers social tariffs. Mr. Battle explains: "Not only are the fuel poor likely to be colder, the higher costs they pay for their energy subsidises cheaper energy for the better-off."

Adam Scorer, energywatch Director of Campaigns, has welcomed the MPs’ intervention: "High energy prices have severely undermined the fight against fuel poverty. MPs are right to be concerned when this month we’ve already seen children’s and elderly charities highlight the impact that unaffordable energy is having on some of Britain’s most vulnerable people," he said.

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