Xinhua News Agency, September 27th, London
Xinhua News Agency reporter Yang Hairuo
The recent sharp increase in natural gas prices worldwide has not only led to the bankruptcy of many natural gas companies in the UK, but also caused supply problems in the UK food industry. Industry insiders worry that if the shortage of natural gas is not improved, the UK’s winter energy supply will face severe challenges.
The industry organization, the British Offshore Oil and Gas Industry Association, said that since this year, the wholesale price of natural gas has risen by more than 250%, and has risen by 70% since August alone. Although this is a global rise, it has a particularly serious impact on the UK.
The United Kingdom is one of Europe’s major natural gas consumers. Natural gas plays an important role in heating, power generation and industrial production, but its natural gas reserves are lower than many European countries. According to British government data, in 2020, 38% of the natural gas demand in the UK will be used for domestic heating, 29% will be used for power generation, and 11% will be used for industrial and commercial purposes.
Many energy suppliers in the UK that have not signed long-term wholesale price contracts have suffered huge losses due to the skyrocketing natural gas prices. Since the beginning of this year, nine small natural gas companies in the UK have successively declared bankruptcy. The market expects that these failed companies will account for more than 5% of the market, affecting approximately 1.5 million users.
The Office of Natural Gas and Electricity Markets, the UK’s energy market regulator, stated that natural gas prices are “rising at an unprecedented rate” and that more energy suppliers may fail in the coming months.
The sharp rise in natural gas prices also shut down two major fertilizer plants in the UK, which resulted in a 60% reduction in the supply of carbon dioxide, a by-product of the fertilizer plants. The British food industry has warned that the shortage of carbon dioxide has directly affected the British meat preservation, poultry slaughtering and carbonated beverage production industries, and many food supplies may be affected.
High natural gas prices also endanger the steel industry. British Iron and Steel Association director-general Gareth Stace said: “Electricity prices will rise in the winter, and the situation is becoming more urgent every day.”
Faced with the sharp increase in natural gas prices, the British government has convened several of the country’s largest natural gas supply and operating companies for talks. British Secretary of State for Commerce, Energy and Industrial Strategy Kwasi Kwotten has stated many times before that the UK has a diversified source of natural gas supply and has sufficient capacity to meet demand.
Capital Global Economic Services Director Jennifer McKeon believes that supply and demand factors have contributed to the surge in global natural gas prices. On the demand side, the economic recovery from the epidemic has boosted natural gas demand. On the supply side, several LNG plants in the United States have ceased production due to the sharp drop in prices last year. McKean predicts that natural gas prices will remain high for a period of time.
The global gas shortage is undoubtedly worse for the UK. Britain’s aging nuclear power plants are undergoing unscheduled power outages for maintenance. The main cables imported from France were shut down after a fire. The recent weak wind has slowed down Britain’s wind turbines, which has led to increased demand for natural gas in the United Kingdom.
British Energy Association CEO Emma Pinchbeck said that the abnormal fluctuations in the natural gas market are the result of unusual weather and unusual energy demand patterns after the epidemic. “For many customers, this will be a challenge. Winter”.
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