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Chris O’Shea, chief executive of Centrica, has warned that the UK’s energy crisis could drag on for two years, signaling that cost-of-living pressures will intensify.

Speaking to the BBC, O’Shea warned that gas prices will not fall soon, as consumers prepare for bills to jump by about 50% this spring.

O’Shea, whose company owns British Gas, the UK’s largest energy supplier, has warned that energy pressures will not be short-lived, so the government needs to provide targeted assistance to those who will suffer the most.


“The market indicates that higher gas prices will be here in the next 18 months to two years.”

There is no reason to believe that energy prices will fall any time soon.

Wholesale gas prices rose last year, hitting record levels at the end of 2021. Although they have fallen since then, prices are about four times higher than they were a year ago.




UK gas price next day

UK daily gas price is around £2 per heat, up from 50p/Ther a year ago Image: Refinitiv

O’Shea says the high gas demand has been driven in part by a move away from coal and oil — driving up gas demand and a scramble for supplies.


“As we move towards net zero, gas is a great transition fuel.

“So when you turn off coal-fired power plants in other countries, there isn’t an abundance of gas that you can turn on quickly.”

BBC breakfast
(BBC breakfast)

The head of Centrica, Britain’s largest energy company, says high gas prices will continue in “18 months to two years”.

employment # BBC breakfast “Next who knows” if prices will drop, Chris O’Shea says. https://t.co/p0v8yCu9XF pic.twitter.com/IeDeuwkmmA


January 12 2022

But he doesn’t think increasing supply from the North Sea as a local solution would have helped:


We bring in gas from the United States, Norway, Europe, Qatar and other places. So we are not in a position to make the UK an isolated energy market. We are part of a global market.”

Bills are expected to jump by as much as £700 in April after Ofgem revised the UK’s energy cap, raising the annual cost of electricity and gas to households on the supplier’s default tariff to £2,000, compared to £1,300 at present.

O’Shea says the government can take three steps to help:

  • Defer the cost to surviving suppliers of facing customers of several companies that have gone bankrupt, rather than adding it to upcoming bills.
  • Deduct 5% of the value-added tax on energy temporarily or permanently.
  • Transfer fees charged to finance the green transition from billing to general taxes.

These moves, he said, can be quickly implemented:


This will take care of half the price hike.

Then you can have more relief targeting those families who need it most.”

Pressure is mounting on the government to act, with Ofgem due to announce a price cap next month.

Last week, the leader of the Liberal Democrats, Sir Ed Davy, called for an expansion of the warm-home discount scheme, which helps people receiving some benefits.

Davy argues that the discount for a warm home should more than double, from £140 to £300, and allow many more people to qualify.

Despite this, O’Shea argues, the current design of the warm home discount system would see relief from some results in higher bills for everyone else.

You can read the full story here:

Chris Bailey
(Financial_Orbit)

defy

Chris O’Shea, chief executive of British gas owner Centrica, said there was “no reason” to expect gas prices to fall “anytime soon”… and said he hoped bills would rise more than 50% to around £2,000 the year would be short-lived. It may be out of place.” https: //t.co/xSUlPIkLjg


January 12 2022

Cost-of-living pressures mean that UK households have suffered the largest reduction in the amount of cash they have available to spend in nearly eight years, as high inflation and rising energy bills hit households.

According to a report by insurer Scottish Widows, the cost of living increase at the end of last year hit people’s pockets and led to the largest drop in cash availability since the beginning of 2014.

She said people are becoming increasingly pessimistic about their financial future in 2022, according to the latest reading from its quarterly index of household finance.

schedule of work

  • 10 am GMT: Eurozone industrial production for November
  • 1.30pm GMT: US CPI inflation for December
  • 3.30pm GMT: Weekly US oil inventories numbers from the Energy Information Administration

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