Energy companies have approached the government for assistance today in coping with huge rises in the wholesale cost of natural gas, which makes up 40 per cent of the UK’s energy mix. The situation could have knock-on effects for many other industries – but why are gas prices so high?
What’s behind the steep rise in gas prices?
Broadly speaking, the rise is the result of the same shortage-of-everything crisis that is disrupting supply chains around the world; complex systems that were suddenly paused during the pandemic are not easily switched back on. The global pandemic caused the largest drop in energy demand since the Second World War, which affected prices and production, with global gas production falling by 3.3 per cent in 2020. But the slump was followed by a very cold winter in Europe and Asia, which meant there was a rapid increase in demand even before the rise in demand that came with the easing of pandemic restrictions around the world in 2021.
Energy prices in the UK spiked last week as a fire at an interconnector – a large power facility through which energy is imported from overseas – in Kent took 2GW of imported French electricity offline. Other factors have contributed to the shortage and spike, including low wind speeds, the decommissioning of nuclear power plants and the planned closure for maintenance of a number of gas platforms in the North Sea.
The UK is already a net importer of gas, so it’s vulnerable to price shocks elsewhere. It also produces most of its electricity from gas, which makes price rises still more significant.
Is Brexit to blame?
Boris Johnson and Michael Gove promised lower fuel bills for households once Britain left the EU. Gas prices in Europe are also at record highs, but countries in the EU’s internal energy market trade efficiently with each other using linked auctions that balance prices across the bloc. The UK, having decoupled its auctions from Europe, could in theory get cheaper energy than anywhere else – if energy was really cheap. But it isn’t, so the UK is more exposed to high prices.
Is Vladimir Putin to blame?
The UK imports less than 1 per cent of its gas from Russia, so it’s not the case that a big valve marked “UK” has been heaved shut in a basement under the Kremlin. That said, the Russian state-owned supplier Gazprom did not auction extra gas in Europe despite the high demand last winter, and has supplied less gas to north-western Europe this year than in previous years. A group of 42 MEPs have asked the European Commission to investigate Gazprom, suggesting that the squeeze on supply is intended to pressure Europe into speeding up the launch of the controversial Nord Stream 2 pipeline.
Why is there a CO2 shortage?
Britain is, if nothing else, a world leader in bitter irony: the country's over-dependence on fossil fuels means it is now facing a shortage of carbon dioxide. Not the atmospheric kind, which is sadly at its highest level in 14 million years, but the bottled kind, which is mostly produced by two fertiliser plants in the UK, both of which have closed as a result of high gas prices.
The lack of CO2 could lead to shortages of meat and frozen foods, since the gas is widely used by the food industry in refrigeration and delivery.
How severe is the gas crisis?
The government released a statement on 18 September saying it does not consider the UK’s energy security to be at risk. Energy bills for existing customers won’t rise immediately, although bills for around 15 million people were set to rise from October anyway due to the raising of the price cap. The consumers who will see immediate price rises are those who get their energy from smaller, more precarious suppliers. If these companies go under, their customers will be switched to the higher default tariffs charged by other suppliers.
The Octopus Energy CEO Greg Jackson has argued that the “crisis” narrative is being used by the biggest energy suppliers (the Big Six) to make the case for restoring the sympathetic regulation they’ve enjoyed in the past.
But Britain’s over-dependence on gas is a crisis in itself. What the UK needs, as Jackson told me recently, is pricing policy that allows energy companies to invest in ever-cheaper renewable generation, and to leave gas behind.
Kampuni za nishati zimeomba msaada kutoka kwa serikali ya Uingereza kukabiliana na ongezeko kubwa la gharama za gesi ya asili, ambayo hufanyiza asilimia 40 ya mchanganyiko wa nishati nchini Uingereza. Hali hiyo inaweza kuwa na athari kwa viwanda vingine vingi <unk> lakini kwa nini bei ya gesi ni ya juu sana? Ni nini kinachosababisha ongezeko kubwa la bei ya gesi? Kwa ujumla, ongezeko hilo ni matokeo ya mgogoro huo wa upungufu wa kila kitu ambao unaharibu minyororo ya usambazaji ulimwenguni kote; mifumo tata ambayo ilisimamishwa ghafla wakati wa janga haijawasilishwa kwa urahisi. Janga hilo la dunia lilisababisha kupungua kwa mahitaji ya nishati tangu Vita Kuu ya Pili, na kusababisha bei na uzalishaji wa gesi duniani kupungua kwa asilimia 3.3 mwaka 2020. Lakini kushuka kwa bei kulifuatwa na baridi kali sana baridi baridi huko Ulaya na Asia, ambayo ilimaanisha kulikuwa na ongezeko la haraka la mahitaji hata kabla ya kuongezeka kwa mahitaji ambayo yalikuja na kupunguzwa kwa vizuizi vya janga ulimwenguni kote mnamo 2021. Gharama za umeme nchini Uingereza zilipanda wiki iliyopita wakati moto uliotokea kwenye kituo cha umeme cha Kent, ambacho ni kituo cha umeme cha Uingereza, ulifanya umeme wa Ufaransa wa 2GW usiweze kuendeshwa. "Vitu vingine vimechangia upungufu na kuongezeka kwa kiwango cha gesi, ikiwa ni pamoja na kasi ya upepo wa chini, kukomesha mitambo ya nyuklia na kufungwa kwa mipango ya matengenezo ya majukwaa kadhaa ya gesi katika Bahari ya Kaskazini. """ Uingereza tayari ni mtoaji wa gesi, kwa hivyo ni dhaifu kwa mshtuko wa bei mahali pengine. Pia inazalisha umeme wake mwingi kutoka kwa gesi, ambayo inafanya ongezeko la bei kuwa kubwa zaidi. Je, Brexit ni kosa? Rais wa Uingereza Boris Johnson na Michael Gove wameahidi kupunguza gharama za mafuta kwa watu wa Uingereza baada ya Uingereza kuondoka katika Umoja wa Ulaya. """Bidhaa za gesi za Ulaya pia ziko kwenye viwango vya juu vya rekodi, lakini nchi katika soko la ndani la nishati la EU zinafanya biashara kwa ufanisi na kila mmoja kwa kutumia mnada uliounganishwa ambao unalinganisha bei katika bloc nzima." Uingereza, baada ya kuondoa mnada wake kutoka Ulaya, inaweza katika nadharia kupata nishati ya bei nafuu kuliko mahali pengine popote <unk> kama nishati ilikuwa kweli nafuu. Lakini si, hivyo Uingereza ni zaidi wazi kwa bei ya juu. Je, ni Vladimir Putin anayesababisha tatizo hilo? "Uingereza inasafirisha chini ya asilimia moja ya gesi yake kutoka Urusi, kwa hivyo sio kesi kwamba valve kubwa iliyoandikwa ""Uingereza"" imefungwa katika chumba cha chini chini chini ya Kremlin." Gazprom, kampuni ya Urusi inayomilikiwa na serikali, haikuuza gesi ya ziada huko Ulaya licha ya mahitaji makubwa ya majira ya baridi kali iliyopita, na imetoa gesi kidogo kaskazini magharibi mwa Ulaya mwaka huu kuliko miaka iliyopita. MEPs 42 wameomba Tume ya Ulaya kuchunguza Gazprom, wakidokeza kwamba shinikizo la usambazaji linakusudiwa kushinikiza Ulaya kuharakisha uzinduzi wa bomba la Nord Stream 2. Kwa nini kuna upungufu wa CO2? "Uingereza ni kiongozi wa dunia katika ""kinyume cha kawaida"" cha nchi hiyo, kwa sababu ya kutegemea mafuta ya makaa ya mawe, ambayo sasa inakabiliwa na upungufu wa kaboni dioksidi." "Hakuna aina ya hewa, ambayo kwa bahati mbaya iko katika kiwango chake cha juu katika miaka milioni 14, lakini aina ya chupa, ambayo hutengenezwa hasa na viwanda viwili vya mbolea nchini Uingereza, ambavyo vyote vimefungwa kama matokeo ya bei ya juu ya gesi. """ Ukosefu wa CO2 unaweza kusababisha upungufu wa nyama na vyakula vilivyogandishwa, kwani gesi hiyo hutumiwa sana na tasnia ya chakula katika baridi na utoaji. Mgogoro wa gesi ni mbaya kadiri gani? Serikali ya Uingereza ilitoa taarifa siku ya Septemba 18 ikisema haiona usalama wa nishati ya Uingereza kuwa hatarini. Gharama za umeme kwa wateja wa sasa hazitapanda mara moja, ingawa bili za watu milioni 15 zilipangwa kuongezeka kuanzia Oktoba kwa sababu ya kuongezeka kwa kiwango cha bei. Watumiaji ambao wataona ongezeko la bei ya papo hapo ni wale ambao hupata nishati yao kutoka kwa wauzaji wadogo, wasio na uhakika. Ikiwa makampuni haya yanaanguka, wateja wao watabadilishwa kwa ushuru wa juu wa default unaotozwa na wauzaji wengine. Mkurugenzi Mtendaji wa Octopus Energy Greg Jackson amedai kuwa hadithi ya "mshuko" inatumiwa na wauzaji wakubwa wa nishati (Big Six) kufanya kesi ya kurudisha udhibiti wa huruma ambao wamekuwa wakifurahia zamani. Lakini utegemezi wa kupita kiasi wa Uingereza kwa gesi ni mgogoro yenyewe. """Kile Uingereza inahitaji, kama Jackson aliniambia hivi karibuni, ni sera ya bei ambayo inaruhusu makampuni ya nishati kuwekeza katika uzalishaji wa nishati mbadala wa bei nafuu, na kuacha gesi nyuma."