Europe faces bulging energy bills because of oil

Europeans are facing big increases in their energy costs this year and beyond as the effect of soaring oil on wholesale power and gas prices hits customers’ bills.

Crude oil prices have doubled in the last year. As a result, wholesale forward and gas power markets have also surged to record highs in the last few weeks and are showing little sign of retracing in the foreseeable future.
“Over the coming months and possibly years, the pressure on retail prices is going to be upwards,” Paul Golby, the chief executive of E.ON UK said on Tuesday.

“If you look at the moment how high wholesale prices have gone they have accelerated significantly ahead of where retail prices are so the pressure clearly is there … From a fundamental point of view I don’t see what is going to change.”

The head of one of Britain’s biggest energy suppliers would not say by how much and when bills would have to rise but analysts expect all British suppliers to hike their retail prices soon.
Very little electricity in Europe is made by burning oil. But, unfortunately for Europeans already paying much more to fuel their cars and to feed themselves, the prices of coal and gas used to generate most of the power are also linked to crude.

Tight global coal supplies and increasingly stringent environmental contraints are adding further pressure on power prices and it is only a question of time before the utilities pass on the increased costs to their customers.

Guardian