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The price of domestic gas is linked to the price of oil |
It said annual average gas bills could rise from £600 to more
than £1,000 early in the next decade.
Continuing high oil prices could lead to rises in
the cost of both gas and electricity, it added.
Centrica managing director Jake Ulrich warned that
gas prices were likely to continue rising "for some time".
"I think it is going to hit
people hard," he said.
"I do think we will see people change their
behaviour, I think
people will use less energy and I hate to go back to the Jimmy Carter
days in the US but maybe it's two jumpers instead of one.
"I think people will change the temperature they
keep the
house, they'll be more cognisant of energy waste, they'll buy better
appliances."
He added: "We're part of a world economy
and I don't think we can
rely on UK production or cheap gas, cheap energy of any sort any more.
"I think it's a reality not only in the UK but in
Western
Europe and North America. Energy is going to become relatively much
more expensive in the future."
BBC News business reporter John Moylan says some
people will
wonder whether, by publishing the research, Centrica - which owns
British Gas - is laying the groundwork for even steeper price rises in
the years ahead.
The study - Under the Influence of Oil - was
conducted for Centrica by Norwegian-based energy advisers Eclipse.
Eclipse managing partner John King said: "This
report signals
the significant change which the UK will go through over the next few
years as the price of the UK gas market becomes influenced by factors
across the globe."
Declining
output
The report said that the link
between crude oil prices and
wholesale gas prices in the UK will get stronger over the next few
years as dwindling output from North Sea makes the UK more dependent on
imports.
The UK must now compete with European
countries for gas transported
by pipeline or bid for tanker loads of liquefied natural gas in
international markets where prices are correlated with oil.
"As recently as 2004 we were entirely self
sufficient but by
2010 half our gas will come from somewhere else," Niall Trimble,
managing director of industry consultants The Energy Contract Company,
told the BBC.
Oil prices, which hit a record above $147 a barrel
earlier this
month, have fallen sharply this week to about $133 a barrel but are
still twice as high as a year ago.
"The gas spot market has risen very, very sharply in
the past year and the spot market is driven by oil," Mr Trimble added.
Price link
The
prices of oil and gas have been linked historically because
factories used to heat their premises using oil and gas together.
The contracts they signed for supply of
fuel linked these two fuels to regulate price.
Suppliers say they are tied by the
wholesale market, but
consumer groups say the price link between oil and gas should no longer
exist.
Energywatch described the link as "toxic" and said
bills would fall significantly if they were decoupled.
"The government is right to say that the link to oil
is a cause
of the problems but wrong to say there is nothing that can be done,"
said Energywatch chief executive Allan Asher.
"The local impact is so catastrophic it should be
leading the
international drive to end the hugely damaging and entirely
unjustifiable link between the prices of gas and oil.
"Rampaging oil prices are a serious and global
contagion. That
does not mean we should just take to our beds and hope that the fever
will pass.
"Government can and should act in those areas where
it can have
an effect. Action to cut to the price link between gas and oil, action
to improve the working of the domestic market, action to help those who
can least afford to keep warm."
But the Energy Retail Association (ERA), which
represents
suppliers, said a reality check was needed, although it pointed out
that assistance was available to customers who were struggling.
"Britain is no longer an energy island and we are
much more
exposed to the global energy markets than ever before," said ERA chief
executive Duncan Sedgwick.
"It looks like the era of cheap energy is over."