British Gas Reports Oil and Gas Price Hike

British Gas has announced an increase to its tariffs for domestic gas and electricity, on the back of rises in wholesale gas and electricity markets, driven up by escalating energy prices in the second half of 2007.

British Gas said that, in the last six months of 2007, higher wholesale gas prices have reduced the company’s operating margins to around 1% and at current wholesale prices would be loss making in 2008 without the increase. As a result, British Gas electricity and gas retail prices have each been increased by 15%, the company said.

The company said that the price increase will not apply to around 340,000 customers on the British Gas social tariff, Essentials, until spring 2008 and 2.4 million customers on fixed term products will not be affected at this time.

Phil Bentley, managing director of British Gas, said: “As the UK’s biggest buyer of gas, we want lower gas prices. However, lower availability of supplies from both the UK and the continent coupled with higher global oil prices have forced up wholesale prices. We can’t absorb the burden of these higher energy prices and the costs of delivering a cleaner environment.”