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7 March 2022

How UK gas prices have surged to a record high

If prices remain this high, the energy price cap for consumers could increase to more than £3,000 a year.

By Michael Goodier

Wholesale gas prices in the UK have reached an unprecedented 650 pence per therm, after expectations of supply disruption from Russia.

Russia’s ongoing invasion of Ukraine has led European countries to enact economic sanctions in response, including the cancellation of the Nord Stream 2 pipeline which would have ferried natural gas directly from Russia into Germany.

The US secretary of state, Antony Blinken, said that American and European allies are exploring banning imports of Russian oil, with Reuters reporting that Europe has become more open to the idea of banning Russian products in the past 24 hours.

If British wholesale gas prices remain this high, it will have a major impact on consumers. Analysts have warned that April’s energy price cap level of £1,971 – a rise from £1,277 due to the supply chain crisis – could increase to more than £3,000. That would equate to an extra £250 a month on energy bills.

In the past six months, almost 30 smaller energy firms have gone bust after suppliers were unable to deliver price promises. From October the government has said that it will offer energy bill discounts of £350 to millions of homes – though £200 is in the form of a loan, and £150 is in the form of a council tax rebate for those in bands A to D in England.

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