Domestic gas prices may rise by 10% in October

GAS prices are set to rise for domestic consumers in October, possibly by 10%, it emerged yesterday.

Bord Gáis confirmed it was negotiating with the Commission for Energy for another price increase from October 1, 2005.

Last year, Bord Gáis hiked prices by over 10% and the increasing price of gas on intentional markets would easily justify another 10% hike in the current year.

The wholesale price of gas in Britain has gone from 11p per therm in 1999 to 44p per therm in 2005. A fourfold increase.

Bord Gáis has not hiked prices by anything like that amount to the consumer, but it is coming under increasing pressure due to the hardening of prices on the wholesale market in Britain.

Bord Gáis acting head of energy supply Paul Kenny said consumers across the globe, and not just in Ireland, can expect “a steady, progressive increase in the price of gas going forward.”

He would not comment on what level of increase was being sought by the company given that negotiations were underway with the commissioner.

With gas being linked to the price of oil on global markets, the long-term outlook for prices was not very optimistic, he said.

To make the point, Mr Kenny said the price of gas in Britain last January came in at 37p per therm.

The price for next January is 75p and that level of increase speaks for itself, he said.

At this point, most of our gas is sourced from Britain, mainly the North Sea. The Kinsale Head Gas Field and other finds account for about 25% of our requirements. The Corrib Gas Field, due to go into production in 2007, will give the country a supply boost. It is about two-thirds the size of the original Kinsale Head Gas Field, which is nearing the end of its life.

Mr Kenny warned, however, that the new supply would do little to ease prices charged to consumers, for the simple reason that it will benchmark its prices from those in Britain, which are going only one way - up.

The Corrib field is owned by Shell, Statoil and Marathon. Gas supplies are projected to last 67 years. But the pressure on oil reserves and moves to cleaner fuels is increasing putting huge pressure on supplies. As concerns about global warming grow, the demand for gas is set to rise as will its price, experts warn.

In its 2004 annual report, the company said householders pay 19% less than the European average for its gas supplies.