UK gas prices fire to 12-year highs as cold snap bites
High demand and an export snag combine to help send wholesale natural gas prices to their highest level for over a decade.
Wednesday 28 February 2018 13:19, UK
The big freeze gripping the UK contributed to the cost of wholesale natural gas more than doubling on Wednesday morning, according to industry figures.
They showed that gas for immediate delivery hit 12-year highs at 190p per therm before slipping back slightly.
An outage at a Norwegian gas processing plant also influenced the jump in costs as it hit exports to UK gas terminals.
Demand for gas has surged to levels not seen since 2013 as freezing winds from Siberia have descended on the country - bringing heavy snow to many parts, particularly counties closest to the east coast.
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Prices this winter had already been forced up by a string of supply disruptions in December, with a lack of sufficient storage facilities placing even greater pressure on imports via pipeline as UK North Sea operations continue to dwindle.
Tom Marzec-Manser, head of European gas at commodity price agency ICIS, said: "It's been a roller-coaster few days already ...with demand moving to levels not seen since 2012, but this morning's prices have been on another level entirely.
"Back in December when Austria's Baumgarten facility blew-up at the same time as the Forties system breaking down, we thought we had hit the high of the winter.
"Then the Within-day price reached 99p per therm. So in comparison, Wednesday's prices are astonishing,"
Experts say the squeeze on storage has made the country vulnerable to upward market price movements.
The tide of rising gas and wholesale power costs raises pressure on energy suppliers to increase their own prices though there is nothing to suggest this is imminent.
The UK currently has over 65 household energy firms, with smaller companies particularly under pressure to raise prices in the past few months as they lack the market dominance and generation capabilities of many of the so-called 'big six'.
Suppliers are also facing political pressure to keep bills down amid Government plans to cap default tariffs.
A spokesperson for industry group Energy UK told Sky News: "Ofgem's latest figures have shown that suppliers of all sizes are facing rising costs - most of which are out of their direct control.
"As the Committee on Climate Change has shown, energy efficiency measures have helped mitigate the effect on customer bills over recent years but it's important that the forthcoming price cap accurately reflects these costs."