Gas prices at a two-year high, putting pressure on already expensive energy bills | Money News

British wholesale gas prices have reached a more than two-year high, risking yet more expensive energy bills.

Low rates of gas storage in Britain and across Europe, combined with cold weather, have increased demand for gas to heat homes.

It’s brought the price up to 140 pence a therm (a unit of heat used to measure gas), a high not seen since January 2023.

Higher gas prices can bring up household bills as electricity costs are linked to wholesale costs.

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Britain is reliant on European gas imports and has less storage capacity than its neighbours.

Last month, the owner of Britain’s largest gas storage site said levels in the country were “concerningly low”.

European storage levels have been depleted by cold weather and are now at approximately 50% capacity, well below the roughly 70% level recorded this time last year.

Gas is bought during cheaper periods, including when demand is lower in the summer, and then stored for use during times of high demand.

Britain is still reliant on the fossil fuel to generate electricity and heat homes and so is vulnerable to volatile prices.

Global trade tensions have stoked fears of more supply shocks. On Monday, China slapped a 15% tariff on US gas in response to Donald Trump’s tax on Chinese imports.

Since Russia’s invasion of Ukraine three years ago gas costs have increased as Europe sought to limit its use of Russian supplies. Russia, however, remains a key source of gas for the continent.

Already expensive bills

Energy bills have already been going up. At the start of last month, energy regulator Ofgem brought up the energy price cap, which limits the unit cost of energy, amid forecasts of a further rise in April.

The energy price cap is revised every three months. A final decision on the cap for April, May and June will be made on 25 February.