UK regulator Ofgem announced in August that with the energy price cap increasing in October, millions of customers will see an average annual increase to their tariffs of £139.
Oil and Gas UK (OGUK) said that the increase of 250% since January is driven by a surge in prices, adding that the global demand is expected to rise for the next two decades. However, according to the trade body, using the North Sea’s resources can help buffer customers from future shortages.
Deidre Michie, OGUK chief executive, said: “More than 40% of our electricity is generated by gas and some 23 million homes are heated by it; so although gas use will decline, it will be important for some years yet. The Climate Change Committee has allowed for this in its carbon budgets.
“Investing in our own gas resources can support the energy transition. Not doing so will lead to more imports, whether by tankers or pipeline. The gas reserves under our continental shelf could boost the UK’s energy security, protect consumers during the transition to low carbon energy, and keep us on track towards our climate goals.”
This comes amid UK utilities reaching breaking point as consistent rises in the wholesale price of gas have made their business unprofitable, with no way of passing costs on. The Oil and Gas Authority also reported last week that North Sea production could be wrapped up by 2030 if no new fields are brought online.
According to Ofgem, 15 million customers will see their energy bills rise, with those on default tariffs paying by direct debit having an increase of £139 a year, from £1,138 to £1,277 due to the cap increase. Prepayment customers will see an increase of £153 a year, from £1,156 to £1,309.
OGUK argues that there could be a similar surge in the future as energy analyst firm Det Norske Veritas has predicted that global demand for gas could rise globally through to 2041, with a decline thereafter.
In its energy outlook report coming later this month, OGUK will highlight the UK’s gas supply and where it comes from. It will underline that there is enough gas to support the energy transition over the next 30 years, but “the ongoing demand for gas and oil requires continued investment” for indigenous resources, and that the current market situation “should provide an impetus” to address declining resources.