New warning over soaring gas prices

Gas prices are set to soar and then remain high for the foreseeable future, a report has revealed.

The independent report commissioned by Centrica, which owns British Gas, warns that prices could increase by 70 per cent.

Jake Ulrich, managing director of Centrica Energy, admitted that gas price rises were likely to lead to a "potentially significant" rise in the number of people in fuel poverty.

He also predicted that people would have to change their habits to deal with higher prices.

He told Channel 4 News: "I do think we will see people change their behaviour. I think people will use less energy and I hate to go back to the Jimmy Carter days in the US but maybe it's two jumpers instead of one."

He added: "I think people will change the temperature they keep the house, they'll be more cognisant of energy waste, they'll buy better appliances."

Gas prices will continue to rise for some time, he said.

"We're part of a world economy and I don't think we can rely on UK production or cheap gas, cheap energy of any sort any more.

"I think it's a reality not only in the UK but in Western Europe and North America - energy is going to become relatively much more expensive in the future."

Gas and electricity watchdog energywatch called on the Government to act now to reduce the pressure on wholesale gas prices and force the industry to deliver affordable energy for Britain's poorest consumers.

Chief Executive Allan Asher said: "The Government is right to say that the link to oil is a cause of the problems but wrong to say there is nothing that can be done.

"The local impact is so catastrophic it should be leading the international drive to end the hugely damaging and entirely unjustifiable link between the prices of gas and oil.

"Rampaging oil prices are a serious and global contagion. That does not mean we should just take to our beds and hope that the fever will pass.

"Government can and should act in those areas where it can have an effect. Action to cut to the price link between gas and oil, action to improve the working of the domestic market, action to help those who can least afford to keep warm."

According to the report, commissioned by Centrica, an annual domestic gas bill could cost over £1,000 within the next few years.

John King, managing partner of Eclipse Energy Group, said: "This report signals the significant change which the UK will go through over the next few years as the price of the UK gas market becomes influenced by factors across the globe such as oil, coal, LNG and CO2 prices."

Cassie Higgs, National Consumer Council energy expert, said: "The energy companies could do more to shield vulnerable people from the worst effects of rising energy prices. An effective response would be for the companies to offer low-cost 'social' tariffs to vulnerable households, such as low-income families and elderly people. Some energy companies are doing well in this area, but others are offering schemes that are inadequate - often rationed and applied inconsistently."

Gordon Lishman, director general of Age Concern, said that the rapid increased in energy bills was hitting pensioners particularly hard.

"Price rises on this scale would mean well over three million pensioner households - more than one in three - would be in fuel poverty. It is totally unacceptable that because of price hikes many older people may feel forced to cut back on their heating, which could put their health at risk" he said.