Are we heading for a winter of discontent?

If one pundit has it right, the UK is about to have its coldest winter for 40 years.

Businesses will only be open three days a week, there will be bankruptcies, gridlock and even "quite severe loss of life", according to London Mayor Ken Livingstone.

Not all weather-watchers are convinced it will be this cold, but even the Met Office the UK's most respected weather-forecasting body believes we're in for a cold snap. Its statistical forecast of the North Atlantic Oscillation (NAO) suggests there is a two-in-three chance that this will be the coldest winter in ten years. If the gloom mongers are right, what does this mean for us?

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If you believe Ineos, the UK-based chemical giant, we are in for a terrible winter. It has some dire predictions for what this would mean, saying that in a colder-than-average winter, the UK will essentially be "closed for business", and the consequences of this, it warned a parliamentary enquiry, are not good: "We expect the UK to be short of gas, leading to a Gas Deficit Emergency. This will have consequences such as three-day weeks, wide-scale power cuts, loss of essential services such as water and sewerage and further business closure."

These devastating forecasts are backed up by Sir Digby Jones, director general of the Confederation of British Industry, who also believes that if it is a cold winter we will run out of gas and go back to the long-forgotten three-day weeks of the 1970s.

And the papers have seized on the images of a snowed-in Britain, warning that commuters will be stranded as train lines and roads seize up, that it's bad news for retailers as everyone stays at home in the warm, and that businesses will have to close down. Studies show that for each degree the temperature falls, the number of deaths goes up by 4.8%. Suddenly, the image of the perfect white Christmas starts looking more like a scene from a horror film. But will it really be that bad or is this an over-dramatic scenario?

Just how cold it is really going to be is anyone's guess. The winter of 1962/1963 was the coldest since 1740. Much of the country was under snow from Christmas until early March. Ice formed on harbours, the Thames which last froze over in 1814 froze as far down as Tower Bridge and it fell to -22.2C in Braemar.

That said, the warning that this could be the coldest winter since 1962/1963 appears to have come largely from Ken Livingstone hardly a world-famous meteorologist although more than a few other forecasters are saying "the worst winter in eight years", or possibly "a decade". Still, that doesn't seem quite so bad.

And the Government has also downplayed the threat, with the energy minister, Malcolm Wicks, accusing Sir Digby Jones of "scaremongering", and a spokesman for the National Grid promising "in the event of a gas shortage, supply to domestic homes is the first priority above supply to industry".

The other good news is that, as with all things, where there are losers, there are winners. If we are going to have gas shortages, that's really bad news for firms such as Ineos that guzzle loads of it (not only is it the UK's third-largest energy consumer, but it uses enough electricity to power the whole of Liverpool, so any level of shortage or price rise would be a major hit).

But at the same time, gas storage firms will profit as their demand soars. At present, the UK is only storing 11-13 days of gas as a protection against a sudden supply bottleneck or demand surge. This looks worryingly low compared to continental Europe, as it is sitting on supplies that would keep it running for 55 days. This would mean that companies that can store imported or North Sea gas should see demand soar.

Gas prices are already high, and a cold snap would push them up even further. Natural gas, despite a recent price correction, "is still pricing in a colder-than-normal winter", says Merrill Lynch's Global Energy Weekly report. But if there is a "very cold snap", they could go from the current price of 75p per therm for January to more than £1. And that's up on just 31p in August.

This possible trebling of costs would increase households' bills by £351m for the winter quarter, according to Energyhelpline.com, which translates to every household paying an extra 15p per day for three months. There are already over two million households that are defined as living in fuel poverty', meaning that they have to spend more than 10% of their income on fuel, and this figure would inevitably rise if gas prices do.

Things don't look any better on the other side of the Atlantic, as America is also facing a chilly winter. "If the future resembles the past, and it usually does," says the Browning Newsletter, "expect this year's stormy summer and fall to be a prelude to a cold, stormy winter."

And as the price of natural gas has doubled since June, the northern states are already looking at heating bills increasing by $100 per month. As Americans are cutting back to cope with the recent spike in petrol prices, a hit from another fuel is only going to exacerbate their problems, suggesting that house prices and retailers could suffer sooner than expected.

But if a cold winter does bring the UK to its knees, who will really benefit? The most obvious winners are firms that can keep the national grid running. Top of the list are those selling gas wholesale and natural gas importers.

Earlier this week, BG Group formerly the "boring old exploration arm" of British Gas, says Tom Stevenson in The Daily Telegraph not only reported a 44% increase in third-quarter profits, but also played down the possibility of blackouts this winter.

As the UK's third-largest oil firm by market capitalisation, BG is well placed to take advantage of increasing oil and gas prices, although it claims it has not been making "extravagant profits" from gas deliveries to the UK, where it has 7% of the wholesale market. But thanks to the fact that it owns 25% of the gas pipeline that links the UK to continental Europe, it would be in a strong position to demand higher prices over the winter (it currently only charges 23p per therm, well below the spot price) in return for preventing shutdowns and blackouts.

Another energy-based winner could be the coal industry. At as little as an hour's notice, coal-powered stations can be activated and increase their output to cover up to 39% (nearly two-fifths) of UK demand for electricity. For the last four winters (even though they were all mild), coal has taken up the slack, boosting the UK's electricity output when other fuels haven't been able to keep pace. And as the coal price has remained much lower than gas coal prices have hardly shifted in the last year switching to coal is increasingly attractive.

Other industries set to benefit include those involved in plumbing and heating, such as Wolseley, as well as ones focusing on insulation. Thermal and winter clothing could also see demand increase as we try to stave off the cold (see below).

But a lot of industries could still be hit hard. Firms reliant on transport, such as FirstGroup, the UK's largest bus company, and Robert Wiseman, one of the three big milk producers in the UK, are already finding times hard owing to hikes in fuel prices. If, on top of that, roads become blocked and other costs increased because of a rise in gas prices, life will become tougher still.

Then there's the high street. Although retailers have just blamed a poor October on warm weather (we weren't out buying our winter woolies), cold weather is apparently even worse. With inches of snow on the ground and high heating bills hitting our bank balances, we don't tend to head out into the cold and splurge on new kitchens, jewellery, or even Christmas presents. And many retailers rely on the Christmas period to generate over half their annual profits. And then there's the fact that icy roads stop us going to the cinema, theatre, or even out to dinner, so a cold snap would also hit the service industry for six.

But just think of all the beautiful snow; tobogganing down hills and making snowmen before crunching your way into work (or staying at home and claiming you've been snowed in). It might not be good for the high street or manufacturers, but there's still a lot to be said for a white Christmas and you could always try and make a quid or two by taking up William Hill's offer of 6/1 for snow in London.

How to keep your energy bills down

So what can consumers do to avoid paying through the nose to keep warm or freezing from cold? The first thing to do is to wrap up warm. By wearing layers of clothes, rather than just one thick coat, you trap more layers of air, which act as insulation.

You should also make sure that you keep your head warm with a scarf or a hat, as you lose more than 30% of your body heat through your head. And you should eat for warmth, suggests the BBC, as "during cold weather, regular hot meals and hot drinks will provide warmth and energy".

When it comes to your house, the most important thing is to keep the cold out, and the heat in. Draughts can increase your heating bill by up to 25%, and even a small effort can reap huge rewards. Heating accounts for nearly 60% of the average household's energy consumption, so it's an expensive thing to waste.

The first thing to do is work out where draughts are coming from by finding obvious gaps. Look for cracks of light under and around doors and windows, listen for rattles' or whistling', feel for moving air around doors, windows, fireplaces and skirting boards. You can check more thoroughly by lighting an incense stick and seeing where the smoke blows sideways.

Once you have found where the draughts are coming from, you don't need to spend huge amounts on professional insulation you can stuff any cracks and drafts with newspaper, put rugs or blankets under doors, and cover your windows with polythene (much cheaper than double glazing, while nearly as effective), or get heavy, full-length curtains that keep cold air out.

Roofs and larger cavities may need more solid insulation. If you have cavity walls, you can have insulation blown in, which takes less than a day to do and is likely to cost around £300 for an average house. Loft insulation, which should ideally be 350mm thick, is cheaper and can usually be put in by the householder. Within a year, the loft insulation should have paid for itself by cutting wasted heating, and the wall insulation should have paid for itself within three years.

Insulating your water tank is also crucial, as this loses a lot of heat. Wrapping hot-water pipes in foam will reduce wastage and if you need to replace your boiler, then a condensing boiler is the most efficient and will save you around a third on your heating bill (see www.boilers.org.uk).

Also, it may be that you are keeping your house much hotter than you need. For every 1 degree centigrade you turn down the thermometer, you will save around £30 every year, so there's something to be said for just putting on a jumper. However, the recommended temperature is 21c, and if your home falls below 16c, the elderly are at a higher risk of hypothermia, heart attacks and strokes.

Storms will whip up softs prices

We might not yet know if this winter will freeze both sides of the Atlantic, but it was impossible to miss the hurricane season this year.

There were more storms this year than any other since records began which is why the last of the season had to be called Alpha, as they had already been through the whole alphabet with girls' names. But was this a one off or are we in for "an era of super-strength hurricanes"? asks What We Know Now newsletter.

A recent study by Georgia Tech and the National Centre for Atmospheric Research reports a vast global increase in the number of "colossal typhoons, cyclones and hurricanes since 1975". And it also suggests that "there is a good chance that devastating storms like Katrina are going to become a permanent part of life in the US".

And if that happens, it's another reason to expect a long-term bull market in soft commodities. Since Hurricane Wilma, spot prices for orange juice are up 35%, reaching record highs at the beginning of this month, as large numbers of orange groves were hit by the storm. Sugar has soared in price, up more than 27% since the beginning of the hurricane season. Other foods have also seen price increases, because Wilma came onshore in Florida, which provides over half the US's fresh vegetables at this time of year.

Because of the supply shortage, "shoppers can expect to pay much more for tomatoes and peppers," according to the Associated Press. These rises could be dramatic tomatoes are already up from around $1.75 per pound to about $4.50. Last year, four hurricanes caused $2bn to $3bn in damages to crops and infrastructure, and the US taxpayer had to bail out producers to the tune of $600m to compensate for hurricane-related losses.

But don't expect the implications of future powerful hurricane seasons to be limited to the economics of soft commodities. "Expect an increase in social volatility, insurgency and anti-US sentiment and the price of commodities that south America usually supplies [such as oil and soybeans] should climb," says The Browning Newsletter.

Five firms praying for a white Christmas

A freezing winter is good news for companies that profit from keeping us warm. Wolseley, for example, is the world's third-largest heating and plumbing specialist. So when all our pipes burst and our central heating packs up, demand for Wolseley's products will rise. "No longer a steal, but still a good bet. Buy," says Questor in The Daily Telegraph.

That said, Wolseley should come with a health warning. The share price has been driven by providing products for new-build homes during the housing bubble. If this bursts, it might fall flat on its face, but until then, cold weather should help it over Christmas.

It will also be good news for SIG if we try to keep out Jack Frost by cladding our attics with insulation, as it "has been insulating homes and offices for years," says Steven Frazer in Shares magazine. SIG is on a p/e of 12 for 2006 above its peers on a ratio of ten but that's "inexpensive for a company with a good track record, strong market position and promising double-digit dividend growth in future".

A more traditional gas play is BG Group, "one of the biggest players in Britain's energy industry", according to The Guardian. Broker Numis has a price target of 650p 23% above current levels.

Another company worth looking at is Dignity. It is a tragic truth of cold weather that more people, especially the old, die. And Dignity is the country's leading funeral provider. With predictable cash flows and strong pricing power, it looks set to benefit from both organic growth of its business and strategic acquisitions. "That's why the shares are highly rated," says the Investors Chronicle (the p/e is punchy at 18). "Buy."

If you don't believe the high street is in for difficult times, you could always try investing in outdoor specialist Blacks Leisure, which found the warm autumn bad for selling its protective clothing ranges. A cold snap could be just what it needs to have us all running into its shops, which include Millets, to buy warm clothes. "Buy," says Philip Aldrick in The Daily Telegraph.