Gas and power prices have dropped sharply from last week’s all-time highs after European leaders drew up measures to limit prices.
The Times reports that wholesale gas prices for the month ahead in Britain fell by about 30%to 445p per therm yesterday — still about nine times higher than the pre-crisis average, but well below Friday’s record high price of 640p per therm.
Wholesale power prices, which are largely driven by the price of gas, also fell. Prices for the month ahead in Britain were down by about 25% from Friday’s highs.
Oil prices also fell below $100 a barrel yesterday on fears inflation will weaken economies and hit fuel demand.
Brent crude, the global benchmark, was trading down 5.5% at $99.31 per barrel last night. The fall was also driven by the news that unrest in Iraq had not put a dent in the country’s exports.
Chancellor seeks deal
Nadhim Zahawi will ask his US counterpart today to help to step up exports of oil and gas to Britain to ease rising energy bills.
The chancellor will meet Janet Yellen, the US Treasury secretary, with a plea to use cheaper US energy to plug the gap left by Russian supplies. He is expected to appeal for western unity in the face of Russian aggression and ask the US not to let President Putin “use oil prices as a way of dividing us”.
Treasury sources played down the prospect of immediate agreement, saying the trip aimed to lay groundwork for deals under a new prime minister.
The visit comes as Mr Zahawi's domestic effort to step-up the UK's gas storage looks set to yield fruit.
Centrica has been given the go-ahead by the industry regulator to reopen the Rough gas storage site off the coast of England.
The North Sea Transition Authority (NSTA) yesterday granted the required approvals and consents to the company to start using the facility once again.
Former Chancellor makes warning
Meanwhile, soaring energy bills could be the "straw that finally breaks the camel's back" for small businesses, former chancellor Alistair Darling has warned.
Mr Darling, who was Labour chancellor during the financial crisis, told the BBC that "bold action" was needed to help the economy.
He said: "Frankly the stuff that's been announced so far might have passed muster earlier this year, it simply won't do now, you need something far more substantial."
Mr Darling said many firms, "especially the smaller ones who have been struggling through the whole Covid problems over the last couple of years may find that the cost of energy is the straw that finally breaks the camel's back".
He said: "My fear is if the government doesn't do something, you will not just have hardship for individuals and businesses, but you will find that people's spending goes down.
"And the risk is, at the moment people are saying the chances of us going into recession are 50-50. It could just tip us into recession, which of course would be disastrous for us."
He added: "One lesson I drew from what happened in 2008 is you've got to do more than people expect, and you've got to it more quickly than people expect, if it's going to work."