UK suffers as Europe keeps grip on fuel

INDUSTRY and households face at least five years of rising energy bills as gas prices soar. The prediction was delivered to 30 leading gas producers and large manufacturing and generating companies at a briefing hosted by the Department of Trade and Industry and attended by new Energy Minister Malcolm Wicks.

The centrepiece of last week's London seminar was a document into gas prices by Global Insight, the forecasting consultancy. It said that industry paid £1bn more for gas last year than Continental rivals because of the difference between a competitive marketplace and mainly stat-eowned monopolies in Europe.

Domestic customers have also suffered because of higher UK prices, with a 22% increase in energy bills in the past two years and prospects of a further 10% rise next winter.

Global Insight cleared the UK gas market of price distortions and pinned the blame for soaring prices on Europe's failure to open up its markets.

While Britain has been self-sufficient in North Sea gas, this supply is running out, and when demand is high - during cold weather, for example - gas must be imported via cross-Channel pipelines. As State-owned companies on the Continent want to keep supplies for domestic use, they sell only at high prices.

This will change when the UK has new sources of gas such as liquefied natural gas, which will be shipped by tanker and pipeline from Russia, but this supply will take five years to emerge.

The briefing confirmed what many experts knew already - there is nothing the Government can do about opening up European markets except to encourage a move towards greater liberalisation. Wicks told the meeting: 'I am conscious of how rises in gas and electricity prices are affecting the competitiveness of UK industry.'

Jeremy Nicholson, director-general of the Energy Intensive Users' Group, which represents big users such as the chemical and steel industries, said: 'British business is at a huge disadvantage compared with competitors on the Continent.'