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Households warned gas price spike could pile fresh pressure on energy bills
Confirmed
In Short: Europe delayed its summer stockpiling due to high wholesale gas costs, leading to a gamble that the Iran conflict would end before winter, according to reports.
Even if the conflict ends, there will still be a lag before energy prices ease, as the Department for Energy Security and Net Zero (DESNZ) warned.
Wholesale natural gas prices are already at three-year highs, with the European benchmark topping €75/MWh, and the UK price reaching 185p per therm, both the highest since late 2022.
The risks to gas prices are tilted towards the upside, with analysts predicting they could top €80 by the end of the year, increasing pressure on energy bills, according to Hussain.
The UK has almost no gas in storage for the coming winter, a huge concern as energy security is national security, according to a LinkedIn post by an unnamed official.
What's confirmed
What's still developing
- Europe, which delayed its summer stockpiling due to high wholesale costs sparked by the Iran war, had been gambling the conflict would end before winter and prices would in turn fall.
- Dr Craig Lowrey, principal consultant at Cornwall Insight, told the BBC on Thursday a fresh increase in wholesale prices would "increase pressure on our January price cap forecast".
- The department also pointed to Prime Minister Andy Burnham's pledge to cut VAT from energy bills from October, as well as government action to reduce Britain's reliance on natural gas altogether. Ángel Talavera, chief European economist at Oxford Economics, said there is a "glass half full, and a glass half empty" picture unfolding.
- "It's serious, but not catastrophic," he told the BBC, adding "something would have to dramatically change to lower prices".
- Talavera said gas prices could come down if the weather helps reduce demand and the Strait of Hormuz reopens sooner than expected.
- Households across the UK are being warned to brace for higher energy bills this winter as European countries scramble to replenish their natural gas stores before the weather dips.
- Storage levels are significantly lower than usual for this time of year, with countries facing the prospect of rushing to buy gas now or paying potentially higher prices when the winter comes.
- The European benchmark natural gas price topped €75/MWh on Wednesday, its highest level since late 2022, the tail end of a spike caused by Russia's invasion of Ukraine.