Energy minister Malcolm Wicks has admitted the gas dispute between Russia and Ukraine could force UK factories to close.
Officials insist there is “no immediate threat” but Jeremy Nicholson, director of the Energy Intensive Users Group, has said high gas prices have already led to some heavy users cutting back.
The country’s biggest gas supplier on Thursday warned of higher energy bills as shivering consumers turned up their heating to stave off freezing weather.
British Gas said surging wholesale costs would force all the country’s suppliers to raise bills further in 2006 after double digit increases this year.
“With wholesale prices where they are, all suppliers are going to have to put prices up in 2006, and I think that is inevitable,” said British Gas managing director Mark Clare.
Gas supply could be “tight” this winter – Blair
The ageing North Sea fields are running out of gas faster than expected, creating fears of a shortage this winter because most new import pipelines and liquefied natural gas terminals will only be ready in 2006 and 2007.
UK gas became the world’s most expensive fuel last week.
The UK’s cold snap has driven the wholesale price of gas up to its highest level since March.
As well as the weather, traders blamed problems at some North Sea gas rigs and a lack of supplies from the continent for the rise to £1.40 a therm.
Tuesday’s gains follow a 50% surge on Monday in spot prices, the price firms pay for gas needed right away.
The past two weeks have produced hefty increases, leading to concerns of problems for high-use UK industries.
Fears have been growing among business leaders over future power supplies and rising gas costs.
Last week Pilkington, the UK’s leading glassmaker, was forced to move from using gas to oil to run its UK operations because it could no longer afford to pay its large gas bill.
BBC NEWS | Business | Gas price surge shows no slowdown
“Sadly we’ve already had a very large round of increases. Every 10% increase in energy prices puts 400,000 people back into fuel poverty,” Alistair Buchanan – Ofgem chief executive