Ukraine crisis: Energy bills could soar by hundreds of pounds as gas prices spike after invasion

The government has been urged to do more to support struggling Brits amid warnings of soaring energy bills as the Russian invasion of Ukraine continues to threaten global gas markets.

The wholesale price of natural gas spiked on Wednesday amid fears Russian president Vladimir Putin could cut off supplies to European countries. 

While Russia only provides around 3% of the UK's gas, it supplies up to 40% of Europe's – meaning any disruption to this is likely to have a knock-on effect on the wholesale cost of gas and oil that Britain imports, making it more expensive for the average consumer.

There are also fears that the Russian president could retaliate to sanctions by the West by pushing up gas and oil prices or interfering with supplies.

Modelling from independent energy market analysts Cornwall Insights on Wednesday warned that the UK's typical annual energy bill could soar to £2,497 in October when the energy price cap is reviewed.

Investec said last week annual energy costs in the UK could climb as high as £3,000.

It comes just weeks after Ofgem announced its energy price cap would be rising by nearly £693 in April, up 54% – meaning the average UK household's annual energy bill will rise to £1,971 on 1 April.

Dr Craig Lowrey, senior consultant at Cornwall Insight, said: "The heavy reliance on gas imports across Europe and in the UK has left energy prices increasingly vulnerable to unstable international geopolitical and economic situations.

Read more: 'Forget about 80p for bread': Fears Ukraine war will be disastrous for cost of living crisis

"With the potential supply disruption from Russia reverberating throughout the European energy market, volatile energy prices are likely to continue for the foreseeable future."

Lowrey added: "To mitigate the impact of rises on consumers and the wider economy, the UK government may need to reassess the level and scale of its financial support to households.”

The unstable energy market comes amid an existing cost-of-living crisis as Brits grapple with rising inflation and tax hikes.

Activist groups are calling for government action, citing fears that energy bills spiking even further will push people into poverty.

"We have been warning for years that fuel poverty is a social justice crisis, a public health emergency and a national security priority, but the government took little action," said Simon Francis, co-ordinator of the End Fuel Poverty Coalition.

"We now need urgent help for households in fuel poverty now combined with a long-term plan to improve energy efficiency of our homes and a sustainable, renewable-led, energy mix.

"The government has talked about this for long enough, but fails to match words with action - the Chancellor's attempt to provide support for people through a "loans dressed up as grants" scheme is a prime example of this."

Read more: What is fuel poverty and which areas are most affected?

Director of policy and advocacy of National Energy Action, Peter Smith, warned people were facing "unhealthy living situations" without further support in the face of soaring costs.

“We are really alarmed by Investec’s estimate that energy bills could reach £3,000 by the end of the year," Smith said.

"Even before the April price cap rise has come in, people are already struggling to pay their energy bills. Come April, we’re estimating that the number of households in fuel poverty will be pushed to 6.5 million across the UK.

"The current support the government has announced won’t be enough to avoid even more debt or unhealthy living situations, especially if there are further significant rises to come later in the year.”

In February, UK chancellor Rishi Sunak announced his energy bill rebate scheme in response to the energy price cap increase to help Brits feeling the pinch - knocking £150 off every household's council tax bill, alongside a £200 interest-free repayable discount on their energy bills.

Despite ministers warning that Russia's invasion of Ukraine will have an impact on the cost-of-living crisis, no additional measures have been announced to soften the blow.

Read more: Revealed: The 10 food items from your weekly shop increasing fastest in price

On Monday, Liz Truss told MPs that Brits would face "economic hardship" in the coming days and months as a result of the war in Ukraine and sanctions Russia.

"The UK and our allies will have to undergo some economic hardship as a result of our sanctions," said the foreign secretary.

"But our hardships are nothing compared to those injured by the people of Ukraine."

Watch: Ukraine crisis could push annual energy bills above £3,000 for millions, expert warns