Household energy bills in Great Britain ‘could rise to almost £2,000 a year’ amid Iran war shock | Energy bills
Household energy bills in Great Britain could rise by more than £330 a year to almost £2,000 this summer, after the war in Iran sent Britain’s gas market to three-year highs.
A typical household gas and electricity bill is predicted to reach £1,972 a year from July under the UK government’s three-month price cap, according to analysis by energy consultancy Cornwall Insight.
The new forecast rises above that of two weeks ago, when advisers predicted the price cap could rise from £1,641 a year from April to June to £1,800 a year from July, after just five days of war in the Middle East.
The newly estimated 20% rise in household energy costs was driven by a rise in European gas prices this week, following a serious escalation in the conflict that has seen some of the region’s most important infrastructure targeted for the first time since the conflict began three weeks ago.
Gas prices in Europe rose 30 percent on Thursday after Qatar confirmed missiles had caused extensive damage to the world’s largest offshore gas processing plant, which could take up to five years to repair.
Europe’s gas markets eased on Friday but prices remained twice as high since the start of the war. The market price of UK gas to be delivered next month also fell 2% to 153 pence per therm on Friday from a peak of 180 pence on Thursday, but remained almost double the level before the Iran war began.
Meanwhile, Brent crude traded at around $107 (£80) a barrel after falling from peaks of $119 on Thursday. The international benchmark is almost 50% higher than before the conflict began.
The £1,641 ceiling for April-June set by UK industry regulator Ofgem represents a £117 cut from the January-March ceiling for millions of households, but prices are expected to rise sharply from the summer.
Households also face the prospect of higher mortgage costs after the Bank of England kept interest rates steady on Thursday but signaled it may have to increase borrowing costs in the coming months. The central bank kept interest rates steady at 3.75 percent.
The risk of a sharp rise in household energy costs has emerged as the world’s energy watchdog called on global governments to consider Covid-style emergency measures to help reduce energy use.
The International Energy Agency said many governments are already considering policies to save energy. These include asking people to work from home where possible to reduce commuting and encouraging the use of public transport or carpooling when travel is unavoidable.
The Paris-based agency also suggested governments could lower highway speed limits by at least 10 km/h (6.2 mph) to reduce fuel use for passenger cars and freight vehicles.
The IEA’s energy-saving measures focus primarily on road transport, which accounts for approximately 45% of world oil demand. However, the institution has also prepared plans to protect liquefied petroleum gas in transportation and heavy industry in developing countries where LPG is used extensively in homes.
