The owner of British Gas, Centrica, has warned that customers that there may be an increase in the price of their energy bills, thanks to a tax hike by the UK government and the nuclear disaster in Japan.
The company has stated it may reduce the amount of investment in the UK since the government has raised the taxes on North Sea oil and gas production, which will have a knock on effect onto us, the consumers.
Centrica has said that the tax hike is likely to reduce the profit growth in 2011, which would in turn send the company’s shares down 3, which could cause massive issues for the company in the future.
The natural disaster in Japan and the unrest in Africa and the Middle East, has caused all sorts of problems in the energy market, which has had an effect globally. These have all hit the market at the same time knocking on the issues all the way down to us!
“In the UK, the forward wholesale prices of gas and power for delivery in winter 2011/2012 are currently around 25 higher than prices last winter, with end-user prices yet to reflect this higher wholesale market price environment,” the statement said released by Centrica.
So far, the first four months of this year, residential gas usage is down 19 and electricity consumption is also down 4 on last year. This could be due to the good weather we have had over the last couple of months, which brought the UK one of the driest Aprils since records began.
However, Centrica has warned of the consequence of the rise in energy taxes, which the government unexpectedly sprung last month. A supplementary tax charge on North Sea oil and gas producers has increased from 20 to 32! A 12 increase is obviously going to have detrimental effects on companies investing in oil in the UK, which is then effecting our energy bills.
“We no longer expect to maintain the previously projected high levels of investment in the UK,” they continued.
It is having such an effect on the company, they are now considering closing one of their gas fields in Morecambe Bay, claiming the tax rise has made it unprofitable.
It is not just affecting Centrica, Norway’s Statoil has put developments in the UK on hold because of the tax rise. It seems the energy market is highly volatile at the minute with an uncertain future ahead in terms of prices.
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