Wholesale gas prices soared to a new record today as expectations mounted that power suppliers could hit UK households with a fresh round of price increases later this month. UK forward gas prices for delivery in January 2009 touched a high of £1.13 per therm earlier today, up from 50p per therm a year ago. The price of gas is closely linked to oil which yesterday rose to a new record of nearly $144 a barrel. Industry sources say the continued rally in gas prices was fuelling expectations that some of Britain’s big six power suppliers could implement a fresh round of domestic price increases as soon as this month. Centrica-owner British Gas, which has the largest number of UK gas customers, is particularly exposed to the high prices. “It’s inevitable we will see retail prices increasing,” said Mr Horstead. National Grid recently published a report which suggested domestic gas production is falling significantly faster than expected – by around 11 per cent this winter compared with the 7-9 per cent fall that had earlier been expected. The shortfall means that more liquefied natural gas (LNG) will need to be imported from overseas this winter than had been anticipated. However, delays in construction of a new LNG terminal at Milford Haven and of gas export facilities in Qatar, a key source of imported supplies, are compounding fears that the UK could face a supply squeeze this winter if the weather proves colder than usual.

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