The rise in gas prices has been blamed on a cold winter which left stocks depleted, high demand and a reduction in supplies from Russia.
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Prime Minister Boris Johnson said “we’ll have to do everything we can” to prevent energy companies going under as wholesale gas prices surge in the UK.
OGUK, representing the offshore oil and gas industry, reported wholesale prices for gas have surged 250% since January – with a 70% rise since August alone.
The rise in gas prices has been blamed on a number of factors, including a cold winter which left stocks depleted, high demand for liquefied natural gas from Asia and a reduction in supplies from Russia.
Speaking to broadcasters on the tarmac of New York’s JFK airport, Mr Johnson said: “I think people should be reassured in the sense that yes there are a lot of short-term problems not just in our country, the UK, but around the world caused by gas supplies and shortages of all kinds.
“This is really a function of the world economy waking up after Covid.
“We’ve got to try and fix it as fast as we can, make sure we have the supplies we want, make sure we don’t allow the companies we rely on to go under. We’ll have to do everything we can.
“But this will get better as the market starts to sort itself out, as the world economy gets back on its feet.”
It comes with Business Secretary Kwasi Kwarteng due to hold a fresh round of crisis talks with the energy industry.
Following a meeting on Sunday with the regulator Ofgem, Mr Kwarteng said “well-rehearsed plans” were in place to ensure consumers were not cut off in the event of further failures.
However, he is expected on Monday to come under pressure from the big suppliers for a major Government support package to help them through the crisis.
The Financial Tines reported the industry wants the creation of a so-called “bad bank” to absorb unprofitable customers from firms that fail.
Meanwhile, Mr Johnson sought to reassure consumers the price increases were only “temporary” as the world economy picked up after the Covid pandemic.
“It’s like everybody going back to put the kettle on at the end of a TV programme, you’re seeing huge stresses on the world supply systems,” he told reporters travelling with him to the United Nations General Assembly in New York.
Following a weekend locked in emergency talks, Mr Kwarteng acknowledged it was a “worrying time” for customers, but said he was confident supplies could be maintained.
He said consumers would be protected from sudden price hikes through the Government’s energy price cap.
However that puts pressure on the suppliers – particularly smaller companies – who are unable to pass on the increases in wholesale gas prices to their customers.
Four firms have already folded and there are fears that more could follow.
Some analysts have reportedly predicted that the UK’s energy companies could be reduced to three-quarters over the coming months leaving as few as 10.
After meeting Ofgem chief executive Jonathan Brearley on Sunday, Mr Kwarteng indicated that in the event of further failures he could appointment a “special administrator” – effectively a form of temporary nationalisation.
“Our priority is to protect consumers. If a supplier of last resort is not possible, a special administrator would be appointed by Ofgem and the Government,” he said.
“The objective is to continue supply to customers until the company can be rescued or customers moved to new suppliers.”
At the same time ministers are grappling with warnings of potential shortages on the shelves as the knock-on effect of the gas price rise ripples through the economy.
Producers have warned that supplies of meat, poultry and fizzy drinks could all be hit due to a shortage of carbon dioxide (CO2).
It follows the shutting down of two large fertiliser plants in Teesside and Cheshire – which produce CO2 as a by-product – with the owners citing the increase in gas prices.
The Food and Drink Federation chief executive Ian Wright said CO2 was essential to many production processes and warned there could be “serious consequences” for supplies within a matter of days.
On Sunday, Mr Kwarteng met with Tony Will, the global chief executive of CF Industries, the UK’s biggest supplier of CO2 and the owner of the two fertiliser plants.
He said they had discussed the pressures the business was facing and “explored possible ways forward to secure vital supplies, including to our food and energy industries”.