Gas prices have soared to a three-year high and oil prices increased further as the Middle East conflict escalates.
Attacks on energy sites in Iran and Qatar were followed by threats from US President Donald Trump to “massively blow up” a key Iranian gas field.
UK natural gas prices spiked by more than 124% month-on-month and 65% up year-on-year, the highest level since the conflict escalated at the end of February. [1]
While the FTSE100 is trading down 1.9% shares in energy firms have risen, taking share price gains by these firms since the conflict started to close to 10%. [2]
A spokesperson for the End Fuel Poverty Coalition, commented:
“These gas and oil prices haven’t been seen since the winter of 2022/23 when an Energy Price Guarantee was needed to protect households from the worst excesses of our exposure to global markets. The reality is that households will face a ‘Trump Tax’ on their energy bills as a result of this war and the case for Government action to support households is becoming impossible to ignore.
“We have written to Ministers with proposals to ensure support reaches the households most exposed to high energy costs first, while giving Government the ability to scale up help quickly if the crisis continues.
“That means immediate support for households relying on heating oil, LPG and other off-gas fuels, help for heat network customers facing rising commercial energy prices, and targeted reductions in energy bills from July when the price cap rises. It also means faster action on energy debt, stronger winter support through the Warm Home Discount and reformed Cold Weather Payments, and an overhaul of electricity pricing so households are not left paying more than they should.
“These are practical steps that can protect people now while complementing longer-term plans such as the Warm Homes Plan and moves to renewables, which are essential to bringing bills down for good.”
Jess Ralston, Head of Energy at the Energy and Climate Intelligence Unit (ECIU), said:
“This will be a major concern to bill payers, many of who are still carrying debt from the last gas crisis when Russia invaded Ukraine. That led to taxpayers having to step in essentially subsidising gas for millions of homes to the tune of tens of billions. And let’s be clear trying to squeeze more gas out of the North Sea has no real impact on the price households pay because its set by international markets and these kind of world events caused by foreign actors like Putin.
“Put simply, if you want to insulate yourself from these kind of price shocks, use less gas. British wind and solar farms lower our dependence on foreign gas, as do net zero technologies like electric heat pumps and this helps with bill stability. British wind power lowered wholesale prices by a third last year. These are permanent solutions, whereas the North Sea is a mature basin running out of oil and gas, quicker drilling means it runs out quicker.”
[1] Trading Economics, 0930 Thursday 19 March.
[2] Bloomberg data on End Fuel Poverty Coalition share price watch list of 15 listed firms involved in the UK energy sector.