'Long-term rise' in energy prices

According to Ian Parrett could the uncertainty in the supply of gas push up the costs and affect domestic energy bills in the long-term.

He also says that prices could be pushed up when the economy starts to recover.But others have suggested that a second round of energy bill cuts could be seen this autumn as wholesale prices fall.

In Great Britain more than seven million British Gas customers saw a 10% cut in gas bills take effect from 19 February.

Wholesale prices

Joe Malinowsky, of price comparison website TheEnergyShop.com, said the price cuts were not deep enough.

He said there was a "mixed bag" of price changes because of the variety of price increases made last year. He expected that differential to narrow following the latest round of cuts.

More cuts?

Each of the suppliers base their tariffs on long-term wholesale contracts and so there is a lag between supply costs coming down and cuts in domestic bills.Mr Malinowsky said he expected a second round of price cuts in the autumn.

Mr Parrett added that energy suppliers might also be dragging their feet over price reductions because of the economic downturn.

Some suggest that as early as 2010, domestic energy bills could start to rise again.

'Unfair pricing'

In the meantime, some customers are still set to benefit as a result of an investigation by Ofgem into unfair pricing.

An Ofgem spokeswoman said the regulator hoped a conclusion would be reached on the issue as soon as possible.


Because of the bad economic situation all the prices increased. So it’s positive when the gas prices decrease. But I don't think that they will rise again like Mr Parrett says. When the economy starts to recover I don’t think that the prices could be pushed up because when the economy is doing well the prices will decrease in general, so the gas prices will also decrease. According to me a lot depends on demand and that depends on the nature and depth of the economic recession. I think there are also other reasons why the prices will rise. The availability and the production of oil is in decline. We also have the speculators, they are boosting the price of oil and becoming very rich in the process. So according to me the gas prices will only increase in the future.

Source: http://news.bbc.co.uk/1/hi/business/7899630.stm

Dominique Van Huffel