Households and drivers should expect a dramatic increase in petrol and gas prices. This comes in the wake of a myriad of problems, including supply, that has plagued the UK since the winter freeze set in.
Supply was severely affected last Monday after the North Sea’s most important oil and gas pipeline was closed. A later explosion at a major processing facility in Austria then added to the already chaotic situation. There has also been a series of smaller issues, including a Dutch pipeline that supplies the UK being restricted and a North Sea site producing less than half of its usual gas.
The culmination of these events meant that wholesale gas prices reached their highest in six years. The knock-on result is a strong concern that this sharp rise will be shifted over to consumers rather than absorbed by companies.
Indeed, gas is not the only sector affected by the supply issues. Petrol is anticipated to climb in price by 3p per litre before Christmas, which could seriously affect motorists visiting family over the festive period.
Energy companies have been warned by MPs that it would be shameful to hike up their prices for consumers given that wholesale prices are settled on far in advance. Indeed, one MP clearly stated that passing on the price increase to consumers would be incredibly unfair given that it is in no way the fault of the consumer nor is there anything consumers could do to help the situation.
Energy companies are being called on to look after their customers and to honour the commitments they have made. This issue is particularly pertinent given the cold spell the UK is currently suffering, which is driving up demand for gas in households. In some parts of the country the temperature dropped down to -13C.
An analyst for Thomson Reuters said that the amalgamation of problems could mean high prices for the duration of the winter. He added that while we might have enough gas to last us today, it might be a challenge to find what we need for January. Small energy suppliers that haven’t bought energy in advance could find themselves in trouble.
What’s more, the price for wholesale gas for January has risen by around a third, causing serious worries about who will absorb the extra cost. There is understandable concern that it will be the consumers who will be most affected by this hike. Yet, if small suppliers decide to do the honourable thing, there is equally a chance that they could run out of money trying to supply energy and consequently go bust.
The whole debacle raises some serious questions about the UK’s energy security as well as its infrastructure and energy policy. Some are saying that this fiasco was entirely predictable and should have been addressed by politicians a long time ago. One source blamed the government for being “short-sighted and ridiculous” for not investing in more gas storage facilities. Particularly given that the Rough storage facility, situated off the coast of Yorkshire was forced to close earlier in 2017.