Iran warfare ‘has already value UK households and companies virtually £10BILLION’
Six months on from the start of the Middle East conflict and analysis suggests it is adding £190million a week in energy costs for households and businesses, and £183million in fuel bill for drivers
Critics say households are counting the cost of “Trumpflation’(Image: AFP via Getty Images)
The first six months of the Middle East war is set to cost UK households and businesses almost £10billion, it is claimed.
The US-Israel and Iran conflict, which erupted on February 28, has driven up costs for households and businesses around the world, including thousands of miles away here, not least from a surge in oil and wholesale energy costs.
Energy regulator Ofgem’s energy price cap jumped in July, and will rise by another 4% from October 1. With wholesale costs remaining high, another increase is currently predicted in January, in the depths of winter.
Think tank the Energy and Climate Intelligence Unit estimates the energy shock will have cost UK households and firms more than £5billon by the time it fully feeds through into bills next year.
The other major impact has been on fuel prices, with motorists feeling the pain at the pump. The ECIU estimates the war has already cost motorists £4.7billion through higher prices.
It came as the AA reported that petrol prices are back to a three-and-half-year high, now averaging 161.6p a litre nationwide. Diesel, meantime, is back to an average of 183.4p a litre – a level last seen at the beginning of June.
According to the ECIU, for every week the conflict continues, UK gas and electricity users are likely to face a further £190million in excess costs on energy bills. This comes on top of around £183million per week in additional road fuel costs already being seen at the pump, it claims.
Jess Ralston, head of energy at the ECIU, said: “Yet again, events thousands of miles away are having a direct impact on the cost of living in the UK.” She added: “The latest volatility in these global gas and oil markets shows how exposed households and businesses remain to geopolitical shocks.”
Analysts Cornwall Insight have recently said that energy bills are currently forecast to rise a further 9% in the new year, putting an average January bill up to £1,872 a year, due to gas price spikes over recent weeks combined factors including the summer heatwave across Europe. The increase is projected to add over £160 to the average household dual-fuel energy bill next year, if wholesale prices remain high.
While cost of living ravaged households – and other – struggle, energy producers have enjoyed bumper profits on the back of the Middle East crisis. Last month saw Oil giant BP announced half-year profits had more than doubled to £6.6billion, while rival Shell also reported a surge.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “Six months on from the outbreak of the conflict in February, energy firms have banked at least £6billion in profits on their UK operations while the bosses of key firms have also seen the value of their personal shareholdings increase by millions. The vast majority of the public think it is morally wrong for firms to profit from this crisis as energy bills surge again driven by the cost of every unit of gas increasing 27% year on year.”
It comes as the boss of energy giant Centrica this week warned the UK has “almost no gas” stored for this winter. Chris O’Shea, chief executive of the owner of British Gas, added to fears of a looming shortfall when temperatures plunge.
The UK has significantly less natural gas storage compared to other European countries, which has spent decades building capacity to cope with a peak in demand. Instead, the UK relies on a small number of gas sites – salt caverns and depleted oil and gas fields – along with imports.
