Why is gas in the UK so expensive?

UK gas prices rose sharply from 2021 onwards, driven largely by global supply disruptions following the COVID-19 pandemic and Russia’s invasion of Ukraine in 2022.

The UK imports a significant portion of its gas, making it vulnerable to international wholesale price swings. Unlike some European countries, the UK has limited long-term gas storage capacity, which reduces its ability to buffer against price spikes. Network infrastructure costs, distribution charges, and levies to fund green energy schemes are also built into household bills.

While wholesale prices have fallen since their 2022 peak, retail prices have not dropped at the same rate, partly because suppliers hedge their purchases in advance and recovery of earlier losses is priced in.