Energy bills to grow by more than £200 a year for millions as Ofgem increases price cap – business live

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Ofgem boss Tim Jarvis, speaking to BBC Radio 4’s Today programme, says the higher price cap for July has been driven “almost entirely” by the rise in global gas prices triggered by the war in the Middle East, and that the price cap for October depends on progress to resolve the conflict.

He said:

It will depend to a large extent on what happens in the Middle East and the progress of any measures to try and get a peace deal and then the speed with which the straits reopen and how quickly the market recovers, but it is unfortunately now looking like a more long term disruption to markets than we might originally have hoped.

…It is a time where it gives people an opportunity to try and prepare for what may be coming in the winter and they might do that by trying to fix in the market for example, and try and insulate them against some of that volatility.

The rise in July energy prices will be felt across households already stretched by the cost of living, and even though it was widely anticipated, that does not make it any easier to bear. Even more concerning is October, where our forecasts are already pointing to a slight rise landing just as people start to turn their heating back on for winter.

A lot of people assume that if the conflict in the Middle East ended tomorrow, prices would return to their pre-conflict levels fairly quickly. However, that may be overly optimistic. The damage to infrastructure, the disruption to supply chains and the erosion of market confidence will not unwind overnight, and the impacts could be felt in bills for longer than many expect.