The boss of the UK’s largest energy supplier has said rocketing energy prices, which are adding to the soaring cost of living for British households, could last for as long as two years.
Chris O’Shea, the chief executive of British Gas owner Centrica, said the energy market “suggests that high gas prices will be here for the next 18 months to two years”.
O’Shea told the BBC there was no reason to think that gas prices would start to fall again “any time soon”.
The rising global demand for gas is partly being driven by the energy transition, according to O’Shea, as countries move away from reliance on coal and oil.
“As we move towards net zero, gas is a big transition fuel, so as you turn off coal-fired power stations in other countries, maybe there is more demand for gas,” O’Shea said.
“There isn’t an abundance of gas that you can just turn on quickly, so I can’t say that this will be done in six months, or nine months, or a year.”
However, O’Shea said he did not believe that increasing the domestic supply of gas from the North Sea would help to solve the energy crisis.
“I’m not sure an increase in UK supply would have brought the price down from £3 a therm, as it was in December, from 50p as it was a year ago,” he said.
“We bring gas in from the United States, from Norway, from Europe, from Qatar, from other places. So we’re not in a position to simply have the UK as an isolated energy market. We are part of a global market.”
Consumers are bracing for a jump in what they pay for household energy in April, after the regulator reviews its energy price cap. Many expect Ofgem’s decision will lead to average bills soaring by as much as £700, taking the annual cost of electricity and gas for households on a supplier’s default tariff to £2,000.
O’Shea, who has headed Centrica for almost two years, recently called on the government to help out struggling consumers by cutting VAT on energy bills, or stripping environmental levies from bills.
According to O’Shea’s calculations, the VAT cut would shave £100 off the average annual bill. However, this move has been dismissed by the prime minister, Boris Johnson.
O’Shea also suggested that the government should fund environmental and social levies through general taxation instead of household bills, which he estimated would cut the average annual total by £170.
Last year 26 UK energy firms collapsed, and O’Shea has previously said that energy companies would have to pass on higher wholesale costs in order to survive, although he has insisted that Centrica would not want to receive a government bailout to help it keep bills down.
Source: The Guardian