A 9% increase in oil prices and a 20% rise in gas prices pushed the Bord Gáis energy index 8% higher in February.
The rise was due to a combination of rising geopolitical tensions, supply constraints, increasing demand, a weaker dollar and improving market confidence. Energy prices also rose due to the severe winter weather experienced across Europe.
The Bord Gáis energy index now stands at a record high of 157 and is 11% higher than this time last year.
John Heffernan, a power trader at Bord Gáis Energy, said that oil prices closed about the significant $120 a barrel price on nine days during February. ''For the first time governments and financial institutions are starting to raise concerns about the effect this may have on consumer spending, the fragile economic growth and inflation,'' he said,
He added that rising energy costs threaten to weaken the European economy by reducing the purchasing power of companies and consumers.
The oil element of the energy index rose by 9% to 169 last month. Bord Gáis said that oil prices hit new record highs in both euro and sterling as tensions between the West and Iran increased. It said the markets continue to factor in the possibility that these tensions could lead to a situation where global oil supplies are disrupted and this is pushing oil prices higher.
The natural gas element of the index jumped by 20% to 221. ''Day-ahead'' prices hit their highest level in over six years on the UK gas trading hub due to the severe weather experienced in Europe and concerns over Russian gas supplies in the first week of February. During the cold snap, Europe sought exports from the UK to compensate for reduced deliveries from the East which put further pressure on prices.
Bord Gáis said that the coal element of the index was down 7% to 125 with European coal prices falling as stockpiles and European generators and terminals remained high.
The electricity element of the index rose by 5% to 125 as a combination of higher gas prices and carbon prices increased wholesale electricity prices. Bord Gáis said that as most of the electricity used in Ireland is produced by burning gas, internationally traded gas prices heavily influence Irish wholesale electricity prices.
Mr Heffernan said that oil prices will continue to be driven mainly the market's perception of tensions between the West and Iran, while foreign exchange movements will also influence prices.
