. (Photo: Getty/PA)
A boss of one of the UK’s energy companies has illustrated how bills have soared by suggesting a pint would now cost £25 if beer prices had risen at the same rate.
The squeeze on gas supplies in Europe has helped fuel rocketing inflation and driven up household bills, with analysts expecting the energy price cap to rise to £3,554 in October. The cap will be confirmed on Friday.
Meanwhile, UK inflation is on course to breach 18% at the start of 2023 due to skyrocketing energy bills, according to new forecasts by economists at Citi.
Octopus Energy chief executive Greg Jackson, who is calling for immediate government intervention to offset the impact of surging bills, told Radio 4’s Today programme: “I think the spate of failures within the 29 companies that went bust last year, that was driven by gas prices roughly doubling. They’re currently nine to 11 times higher than usual.
“Look, to put that in perspective, if this was beer, we’re talking about the wholesale price being £25 a pint.”
If the price of beer had risen at the same rate as gas, a pint would now be £25… sobering stat from Octopus CEO Greg Jackson on Today
— Jack Elsom (@JackElsom) August 22, 2022
He added: “People don’t know what a therm is, but, underneath it, the price per therm has gone from 60p to around £5 at the moment and that’s what’s passing through to customers if we don’t do something,”
Jackson went on: “There are systemic issues. There are loads of questions of how we pay for this.
“One thing we can’t do is be expected to pass those costs on to consumers.”
The recent surge in energy prices has been driven by wholesale prices, specifically the soaring cost of gas.
Last year, countries in Asia and Europe used significant amounts of gas stocks during a long winter which helped to drive up prices while the reopening of economies as the Covid-19 pandemic receded also sparked higher energy usage.
More recently, the invasion of Ukraine by Russia has led to a restriction of Russian gas which has in turn pushed prices higher.
The soaring wholesale price has led to energy firms passing those costs onto customers – pushing up household energy bills by unprecedented amounts.
But the price cap on bills prevents firms from taking excess profits from the gas and electricity they sell to households. The companies are currently allowed to make earnings before interest and tax of £35 per household.
Bills for an average household are currently capped at £1,971 a year. Consultancy Auxilione has predicted this could reach a record £6,089 in April.
This article originally appeared on HuffPost UK and has been updated.