If fuel prices were rising as steeply as household energy bills, the Government would be facing a political crisis. The soaring cost of heating caused by rocketing wholesale gas prices may not immediately filter through, but we will all feel the
pinch soon. The price cap on bills is set to rise by 50 per cent to take account of higher wholesale prices which have already bankrupted 20 smaller suppliers covering four million customers who have had to be transferred elsewhere.

Energy company bosses met Business Secretary Kwasi Kwarteng to discuss how to avert what one called “an enormous crisis for 2022”. Stephen Fitzpatrick of Ovo doubted whether ministers fully grasped the severity of the situation. “There’s an acceptance that there’s a problem, but nowhere near enough urgency to find a solution.”

One answer would be to remove VAT on energy, but the Government is reluctant to do this partly because of the revenues it generates but also because loading costs on to gas is central to its “green” agenda. Other factors are beyond the Government’s control, such as the weather in eastern Europe and Russia’s use of its gas to put pressure on EU countries over Ukraine.

But with average household bills set to rise above £2,000 when the price cap is removed in the spring, doing nothing is not an option. An energy supply crunch this winter in the midst of panicky new lockdown measures would be an economic disaster. Power cuts would make working from home difficult, if not impossible. 

Ministers may hope that large-scale imports of liquefied natural gas to Europe from America will push prices down again. But given the volatility of the market, this can only be a temporary reprieve.