Gas price breaks £1 a therm barrier

The price of gas for delivery during the first three months of next year reached 100.93p on the commodity markets, a rise of 5% compared to Friday's close.

This is more than double the cost of a year ago - and the first time a forward contract has breached the £1 a therm mark in the summer, when historically supplies are cheaper.

The spike has come as the price of oil - which is linked to wholesale gas - surged to a new record above 139 US dollars a barrel on Friday. Oil has since eased back slightly, but is widely feared to rise even further on demand concerns.

There has also been a steady demand for UK gas supplies from the continent during the past month.

Energy consultant Nigel Cornwall said with no price relaxation on the horizon it was a question of "when and not if" the UK's major suppliers would put up their prices.

He is expecting to see domestic bills rise by at least 20% before the end of the year, and predicted a game of "call my bluff" among the major suppliers to see who moved first.

Pipeline flow data from the UK shows that Britain has been exporting gas during the past month. European firms have been buying supplies from the UK market to top up their own supplies.

In a further sign of wholesale gas price pressure, other contracts used by energy firms to secure summer supplies are also running at around double their cost compared to a year ago.

The price of gas contract for August delivery is around the 74p a therm mark, compared to around 31p a year ago.