Britain faces a fresh energy cost crisis as wholesale gas prices surge due to Middle East supply disruptions, adding to the burden from the Ukraine war. Gas supplied about 35 per cent of UK energy demand in 2024, heating most homes and businesses and powering roughly one-third of electricity. High gas prices dominate the market, pushing up electricity costs across the board. Successive governments have struggled to reduce gas dependence, with offshore wind development lagging and heat pump adoption painfully slow.

The UK produces 45 per cent of its gas but relies heavily on imports, shifting from Qatari LNG to US supplies. Europe's gas markets are interconnected, but Britain's higher reliance and lower storage make it more vulnerable. Gas prices jumped 75 per cent in a week, driving power prices up sharply in the UK compared to Germany and Spain.

While the energy price cap shields households until July, wholesale costs currently account for £690 of the typical £1,758 bill, a rising portion. Crucially, businesses bear the full brunt of these surges, facing immediate cost hikes that could inflate food and goods prices. Energy costs were already elevated pre-crisis, leaving businesses with little buffer.

This shock underscores the fragility of the UK's energy system and the urgent need for faster transition away from volatile fossil fuels.