Natural gas price races to two-year high

The UK is facing a surge in energy prices after Japan's nuclear crisis sent the cost of natural gas soaring to a two-year high.

The price of liquefied natural gas (LNG) jumped more than 7% yesterday to reach 74p per therm, on expectations that imports destined for the UK will be diverted to Japan.

Japan is the world's largest consumer of LNG, with 30% of its power supply coming from this source.

Its need for LNG is likely to increase after 11 of its 54 nuclear reactors were shut off due to fears of a meltdown.

The impact could filter through to UK consumers' gas bills, as energy suppliers pass on the rising cost of LNG, analysts warned.

Adam Forsyth, of Matrix Group, said: 'There has already been a reaction in the gas market and we would expect higher prices in the LNG market to have an impact in the UK.'

The forecast provided a boost for companies such as gas explorer BG Group and coal-focused UK power plant Drax, but British Gas owner Centrica - which buys gas on the wholesale markets - fell 6.3p to 325.25p.

Brent crude was up 13 cents to $113.97, as the unrest in the Middle East offset earlier falls on expectations of reduced demand from Japan.

(Source: http://www.thisismoney.co.uk/markets/article.html?in_article_id=525580&in_page_id=3)