The boss of Britain’s biggest energy supplier has warned that soaring gas prices which are fuelling a sharp rise in the cost of living 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”.
There was no reason to think that energy prices would come down “any time soon” and action must be taken to help people unable to afford their bills, he told the BBC.
“When I talk to our customers and hear how distressed they are about the increases in prices that are coming, I think it is inconceivable that we don’t do something to help those people, but it has to be targeted at those people.
“It can’t be targeted at energy companies, it has to be targeted at those people who can least afford the price rises that are coming.”
The energy price cap which sets a maximum level for millions of customer’s gas and electricity costs is expected to jump by more than £700 in April, hitting the budgets of those on low incomes hardest. Energy regulator Ofgem will announce the new cap next month.
Mr O’Shea backed three measures to reduce the price rise by half: deferring the costs related to supplier failures, scrapping VAT for energy bills and removing green levies.
The government should then also consider further, targeted relief for those most in need, he said.
Gas prices have been pushed up in part by high demand as countries move away from more polluting fuels while not yet having made the transition to renewable energy sources.
“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,” Mr 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, Mr 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, to 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.”
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