Gas prices surge puts heat on household energy bills

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In London trading, gas for delivery in the first quarter of 2009 leapt to 105p and to 101p for the 2008-9 winter as a whole.

"Wholesale gas prices for next winter are now more than double last winter's 48p," said one trader. "Power [electricity], which is driven by the price of gas, is up again with winter at £88.25 per megawatt/hour versus £50 last winter."

A rise in retail prices is almost certain this summer. Consumer groups believe household energy bills could top £1400 by the end of 2008 with a year-on-year increase in excess of 40%. It emerged last week that British Gas's market tracker product, which is sold to 2500 customers and changes every quarter, has just gone up by 14%.

A leading energy executive said today: "I think all suppliers are watching with interest, given the scale and speed of the wholesale price increases."

The surge in the gas price reflects the extraordinary bounce in oil prices at the end of last week when crude leapt by a record-breaking $16 a barrel in two days' trading.

Though oil was today down $1.60 at $136.94 in New York, and London's Brent crude was off $2.44 at $135.55, influential analysts like those at Goldman Sachs are still predicting it will hit $150 a barrel.

As a result, prices of fuel on Britain's forecourts have shot up. A litre of diesel now tops 130p, and unleaded petrol is averaging 117p.

Speaking in the Far East today, Britain's most senior oilman, BP chief executive Tony Hayward, declared the era of cheap energy over, blaming governments of oil-producing nations for failing to encourage exploration.