finance
Rising Wholesale Energy Costs Linked to Middle East Tensions Drive Forecasted UK Bill Increases
UK energy bills for typical dual-fuel households are projected to rise by 18% to £1,929 annually from July, following a recent reduction. The increase stems from elevated wholesale prices tied to Iran-related tensions. US gasoline prices have also climbed to an average of $4.14 per gallon amid similar global oil market pressures.
Apr 8, 8:57 AM·2m read3 sources
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in the UK The Ofgem price cap for a typical dual-fuel household in the UK is forecasted to increase to £1,929 per year starting July 1, an 18% rise from the current £1,641 level.
ON, OVO Energy, and Octopus Energy. The forecast comes from Cornwall Insight, with Ofgem expected to confirm the new cap by May 27. Households on standard variable tariffs in England, Wales, and Scotland will be affected by the changes.
The projected rise follows a 7% reduction in bills effective April 1, which lowered annual costs by £117. Energy analysts attribute the upcoming increase to rising wholesale energy costs observed in March.
the Price Cap Adjustment Wholesale energy prices rose in March due to tensions involving Iran, influencing the Ofgem price cap calculation.
Cornwall Insight principal consultant Craig Lowrey stated that a July increase is unavoidable, though the exact height remains uncertain. He noted that summer's lower energy demand could mitigate the impact on household expenditures. Analysts indicate limited expectation for significant near-term declines in wholesale prices.
Lowrey warned that sustained high wholesale levels could lead to a larger effect on the October price cap. The changes apply to households across England, Wales, and Scotland on standard variable tariffs.
“A rise in July is pretty much unavoidable, but how high prices go remains to be seen.”
The average US gasoline price reached $4.14 per gallon, with prices up to $6 in California, according to BNO News. A prediction from Kalshi suggests the national average could hit $5.80 this year. Separately, American Petroleum Institute CEO Mike Sommers stated that gasoline prices will remain at comfortable levels for consumers through April.
