Wholesale gas prices hit another record high adding to energy market concerns
The UK energy crisis shows no signs of abating after wholesale gas prices increased to another record high, adding to worries that the industry will see more energy suppliers exit the market over the coming days and weeks.
Energy Supply Crisis becoming a global issue
Fossil fuels have surged in price over the last few weeks with the cost of coal and carbon emissions permits also surging to all time highs on Tuesday. Oil prices too are climbing with a barrel exceeding the $80 level for the first time in three years.
Tim Dixon, the lead analyst at Cornwall Insight, said: “UK emissions trading scheme carbon prices also recorded [their] largest-ever day-on-day rise on our records, jumping £8 per tonne this morning to reach an all-time high of £75 per tonne. Rising energy prices and ongoing high auction demand for carbon allowances are pushing this upwards.”
The situation is now looking so bleak in terms of prices that it is increasingly looking like we are about to experience a global energy supply crisis.
Energy suppliers across the world have been hit hard by the soaring prices with governments across Europe announcing funding and support schemes for the embattled market.
The UK is particularly vulnerable to the widening crisis due to its reliance on gas to create electricity and with winter rapidly approaching it is the primary resource people use to warm their homes. Gas for delivery to British buyers jumped by 20% to 218.4p a therm on Tuesday and could rise further today and the next few weeks.
Adding to the situation is Russia who in an attempt to put pressure on the EU to authorise gas flows via the Nord Stream 2 pipeline. Yesterday it was reported that gas flows via the Yamal-Europe pipeline were cut by more than half as Putin tightens supply.
Also read: Energy Rationing Fears grow due to low UK gas reserves and Russian opportunism
Lack of supply
The UK is facing a tougher time compared to some EU countries due to its low gas storage capacity and the government’s failure to ensure there was adequate supply stored throughout the Covid-19 pandemic.
In an attempt to save money supplies were not recouped putting the nation into the precarious situation it finds itself in today.
If gas prices continue to soar (and it is looking likely they will) heavy industry and the food and drink sector has warned that it may be forced to shut down over the winter to prevent blackouts.
The Energy supply market has been hammered by the soaring prices with several energy suppliers being forced to shutter. If prices remain high for a long period we could potentially see the strain begin to impact the larger suppliers and the closure of more smaller firms becomes increasingly likely.
Also read: Soaring gas prices and unreliable wind sees the UK turn to Coal to keep the power on
At the mercy of the Winter
Many analysts are warning that if the coming winter turns out to be a particularly cold one then the UK will face severe problems.
“If the winter is colder than normal, natural gas supplies could run even shorter, leaving Europeans and possibly other countries, especially those that can barely afford current energy prices, in the cold,” said analysts at SP Angel.
Also read: What is the Warm Home Discount Scheme and what does it mean for energy suppliers?
Looking to enter the UK energy market? Dyball Associates team of energy market experts can guide you through the steps to get qualified and attain your gas or electricity licence.
Whether you’re looking for electricity and gas systems or support on starting an energy supply company, Dyball Associates can help.
Further Reading
Get rid of green levies to support energy suppliers and cut energy bills says E.on boss
Wholesale Energy Prices, Bad Debt and the Price Cap are proving detrimental to Energy Suppliers
Dyball Associates are proud to help new supply businesses successfully launch in the UK market.
Through our energy market consultancy services, and the software we’ve developed, we’re supporting new UK electricity and gas suppliers to get set up and start supplying.
For more information on how to start and manage an energy company, get in touch with Dyball Associates today.
More articles
Latest News
© 2022, Dyball Associates Limited. All Rights Reserved.
Web design by CW.
