From April 1, the energy price cap will rise by £693, putting the average household’s annual energy bill at £1,971. The Government is under increasing pressure to provide support for struggling households as the cost of living crisis – already pinching across the UK due to a surge in gas wholesale prices – looks set to get worse, with the Russia-Ukraine crisis sending the cost of energy through the roof.
Gas prices soared by 40 percent last week, with analysts warning that if wholesale prices remain this high, the price cap – already poised to rise 54 percent in April – could almost double by the end of the year, adding an extra £1,000 to annual household bills.
If this manifests, it will drive up the average household energy bill to around £3,000 – as of April 2021, it was around £1,300.
Some consumers are reportedly already being quoted fixed-rate tariffs of £3,500 a year.
And some are predicting even worse – Investec analyst Martin Young now thinks that, in the light of surging wholesale market prices, the level will continue to soar past £3,000.
Mr Young said: “This could be devastating for UK households with elevated fuel poverty, and an ‘eat or heat’ dilemma.
“The political crisis will intensify, and Government will need to go further than current measures, and be more targeted.”
READ MORE: Putin blinks first: Bumper gas supplies sent to EU
The shocking price rises are being driven by concerns over the reliability of supply following Russia’s invasion of Ukraine.
Russia is the globe’s third-biggest exporter of oil, and while the UK doesn’t rely heavily on Russian supply directly for its energy, Europe does, and its market prices determine those of the UK.
The privatisation of UK supplies in the North Sea ties consumers to the going rate on international energy markets, leaving the UK as exposed as any other country to rising prices.
In fact, some analysts say Britain is even more vulnerable than the rest of Europe, as it has so little control of domestic supply.
Whitehall officials have been modelling the impact of sanctions over the short, medium, and long-term, with some studying the consequences for the UK economy of measures that last about three years.
A Government source said: “It depends whether we are in this for the long haul, but it is clear that fuel prices are going to rise far beyond what we have previously seen. The impact is going to add a lot to the cost of living.”
Prime Minister Boris Johnson told the House of Commons last week that his Government “will do everything possible to save our people from the repercussions for the cost of living”.
This week, Mr Johnson will meet with leaders in Saudi Arabia to discuss an increase in oil output as the world seeks to “wean itself off” Russian supply.
Bank of England set for third interest rates hike [INSIGHT]
Brexit Britain seals £1billion investment from Saudi Arabia [REPORT]
Energy bills: The one kitchen appliance adding £392 to your bill [ADVICE]
Critics have expressed concerns over this move, however, with Saudi Arabia accused of gross human rights violations at home and in participation in the war in Yemen.
MPs across the House have criticised the Prime Minister for opting to support one warring regime over another.
Labour leader Sir Keir Starmer said: “Going cap in hand from dictator to dictator is not an energy strategy”.
But a spokesman for the Prime Minister said: “We will be speaking to the Saudis about a range of issues, not just energy supply.
“Diversifying our energy supply is important, as is boosting renewable energy. There are no quick fixes but we do want to reduce the volatility and bring prices down.”
Health Secretary Sajid Javid said the UK was always “very candid and frank” about human rights concerns, but added that Saudi Arabia was an “important economic partner”.
He said: “You know, whether people like it or not, Saudi Arabia is the world’s largest producer of crude oil and it’s important, especially at the time of a major global energy crisis, that we have these talks with them.”
And Liberal Democrat home affairs spokesperson Alistair Carmichael said: “If the Prime Minister goes…to Saudi Arabia, we will be sending a very clear signal that we are not that bothered about this kind of thing.”
Meanwhile, Green MP Caroline Lucas said the Government must see the “contradiction” of replacing Russian oil to go “cap in hand to another murderous tyrant who executes his own people”.