Energy price rise fears over gas supply issues

Concerns have been voiced over the security of the UK’s energy supplies after a series of setbacks saw the price of gas rise sharply on wholesale markets.

Discovery of a crack in the Forties pipeline, which carries gas from the North Sea, was followed by an explosion at an Austrian distribution site which affected supplies from the continent.

Wholesale gas prices soared by 50 per cent over the course of 24 hours, pushing up costs to their highest level for six years although they have since fallen back amid warmer weather.

Massimo Di-Odoardo, an industry analyst at Wood Mackenzie, said: “The European gas market seems to be going through a perfect storm.”

Analysts at investment bank Jefferies pointed out in a research note: “The timing of the outage could not be much worse as winter weather is just materialising.”

Ian Liddell-Grainger, a Conservative MP and member of the House of Commons’ Business and Energy Select Committee, said energy companies would have bought gas and oil six months in advance and called on suppliers not to raise prices for consumers.

The Forties pipeline, which has been shut for repairs, also carries oil from North Sea fields, leading to fears of price increases at filling stations by as much as 3p per litre before Christmas.

The UK is due to receive its first direct supplies of gas from Russia next week in the wake of the Forties closure. The LNG shipment is due to land at the Isle of Grain terminal in Kent on December 28.

Stuart Fegan, national officer for energy at the GMB trade union, said: “Once again we see the folly of leaving our energy needs in the hands of foreign governments and companies. Unless we shore up our own energy security, we leave ourselves at the whims of dictators, despots and unpredictable hikes in wholesale prices.

“At the same time, to make sure we can keep the lights on, the UK needs a balanced energy mix including nuclear, renewables and the necessary exploration of onshore shale gas wells.”

Wenonah Hauter, executive director of environmental group Food and Water Watch, said the Austrian explosion and Forties shutdown “shows Europe’s true vulnerability – it’s strong and systemic fossil fuel addiction”.

He added: “The only way to gain its independence and to guarantee access to abundant clean energy for Europe’s citizens is to swiftly move off of fossil fuels and finally put major investment and public money into 100 per cent renewables and energy efficiency measures.”
Source: SmartestEnergy