British Gas has announced record price increases.

Centrica, the owner of British Gas, has announced record price increases of 35% for gas and 9% for electricity, citing elevated wholesale energy prices and waning UK gas reserves.

This news follows the announcement that EDF Energy has also put its prices up with immediate effect – an increase of 22% for gas and 17% for electricity.

Both companies attributed the rise in prices to the cost of oil, which the Organisation of Petroleum Exporting Countries (OPEC) recorded as standing at US$120.88 (around £61) a barrel today (31 July).

British Gas also blamed diminishing gas reserves in the UK. While the country has to import 40% of its gas needs, high oil prices have meant that the volume of gas shipped to the UK has fallen by 60% due to increasing global demand – thus increasing the cost of gas even further.

Phil Bentley, Managing Director of British Gas, stated the company could not absorb such high wholesale prices: “The simple fact is that we have entered an era of unprecedented high world energy prices. The only answer to cope with [them], I’m afraid, is for all of us to be more energy efficient and we will be contacting all our British Gas customers to show how they can save energy to try to offset these price rises.”

The company also added that the average dual fuel bill has had £32 added to it as a result of increased transportation and distribution costs, along with the cost of meeting environmental targets set by the government.

Both British Gas and EDF Energy stated that they will work hard to ensure that vulnerable customers are cushioned as much as possible from the price rises. However, in response to the price increases announced by EDF Energy, Age Concern has voiced its fears that pensioners will feel the impact.

“It is an absolute disgrace that an estimated 2.25 million older households are now living in fuel poverty with thousands more facing the same fate. The help being offered to the poorest and most vulnerable energy customers by the government and energy companies is woefully inadequate,” commented Gordon Lishman, Director General of Age Concern.

The charity said that fuel vouchers should be issued in the first instance to the poorest pensioners, while the government should introduce mandatory social tariffs to help protect vulnerable customers even further.

Martin Lewis, of moneysavingexpert.com, has advised his online readers to cap their energy tariffs in an effort to protect themselves from further price increases. He predicts that the other energy companies will also increase their prices in the next few weeks and that further increases are likely to happen again next January (2009).