What are current gas prices in the UK, and how much do they contribute to energy bills?
The UK enjoyed a period of falling gas prices until 2004/05, when it first started to import more gas than it produced. While average prices were around 20 to 30 pence per therm (one therm is about 2.64 cubic meters of natural gas) in the early 2000s, they were about 56 pence per therm in 2011. Winter gas price for 2011/12 were around 40 per cent higher than the previous winter.
Consumers’ energy bills have also been increasing. While an average household dual bill (for both gas and electricity) was about £1,195 in March 2009, it was £1,470 in March 2013.
According to Ofgem, the UK energy regulator, higher gas prices have been the main driver of increasing gas and electricity bills over the last eight years. Notably, the cost of the fuels used for generation accounts for around half of the wholesale electricity price. As a large portion (35-50 per cent) of electricity is obtained by burning gas, changes in the gas prices can significantly affect the electricity price.
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