Consumers are being denied the benefits of a sudden collapse in the price of natural gas that is bringing a profits surge to gas utilities.

Margins in the gas industry are reaching record levels, experts claim, because of an emerging glut of fuel in the wholesale markets caused by the recession and new supplies.

But utilities are failing to pass on the benefit of a fall, by two-thirds, in the wholesale price. The gap between the retail price and the wholesale cost is expected to boost the profits of the residential business of British Gas by more than 50 per cent this year.

Wholesale prices are tumbling and are expected to fall further, says Niall Trimble, director of The Energy Contract Company, a gas consultancy. “There is a lot of gas about and we are very over supplied. For three years we will have weak prices.”

The gas glut and mounting evidence of increasing utility margins will put pressure on gas retailers to pass on the benefit.

Joe Malinowski, founder of The Energy Shop, a gas and electricity broker, thinks that the margin between the wholesale price and the average retail price has reached an all-time high. “If wholesale prices stay where they are and retail prices don’t come down there will be question marks over what is going on,” he said.

Consumer Focus, which monitors energy prices, predicts that households are being deprived of a potential £1.3 billion in savings on their gas bills.

According to estimates by The Energy Shop, a gas company would pay about 1.45p per kilowatt hour to supply an average customer for a year. On top of that it would bear the cost of distribution, storage and marketing at about 1p per kilowatt hour. Today the average price charged to retail gas customers is 3.8p per kilowatt hour.

The effect on individual companies will differ, depending on how much gas they have on long-term contracts and whether they have hedged their exposure to price movements.

The price for “day-ahead” gas fell almost 10 per cent yesterday to 22.7p per therm and the spot price has fallen by two-thirds since February “These are the lowest prices for two years,” said Edward Cox, of ICIS Heren, the gas market consultancy.

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