Natural gas prices continue to rise
Nine UK energy retailers collapse as natural gas prices surge
Natural gas prices continued to rise on Wednesday, wreaking havoc in Europe and in the United Kingdom in particular.
The commodity has dramatically risen in value in recent months due to a variety of reasons, from increased demand in Asia, limited exports from Russian and low inventory levels.
Since the start of the year, gas prices have doubled in the United States, and surged by around 175% in Asia.
Last week, the one-month natural gas contract at the Dutch TTF hub, a European benchmark, jumped to a record high of 79 per megawatt hour, a 250% increase since the start of 2021.
Following such rapid rises, the International Energy Agency (IEA) this week called on Russia to step up its supply of natural gas to Europe.
The energy watchdog stated, "The IEA believes that Russia could do more to increase gas availability to Europe and ensure storage is filled to adequate levels in preparation for the coming winter heating season. This is also an opportunity for Russia to underscore its credentials as a reliable supplier to the European market.”
Although Russia’s Nordstream 2 pipeline supplying natural gas directly to Germany could come online by the end of the year after prolonged delays, the IEA warned that European gas markets could face “further stress tests from unplanned outages and sharp cold spells, especially if they occur late in the winter.”
With winter not having even begun, the British energy sector can be said to already be in crisis. The pronounced rise in wholesale gas price have thus far caused nine UK energy retailers to close this year. Two of these firms, Avro Energy and Green, collapsed Wednesday, with 580,000 and 250,000 customers, respectively.
Speaking to the Business Committee, Jonathan Brearley, the head of energy regulator Ofgem, stated, "We do expect more (suppliers) not to be able to face the circumstances we're in, but it's genuinely hard to say more than that, partly because that means predicting what may happen to the gas price."
The crisis has threatened to engulf other areas beyond retail energy suppliers. On Tuesday, the British government finalised a multi million-pound bailout package to get a US fertiliser company to abandon its decision to close two carbon dioxide plants made economically unsustainable by rising gas prices.
The closure would have substantially affected both the UK’s food and nuclear industries.
By 12:45 EFT, US natural gas spot traded up by 0.6% at $4.893 per million Btu.
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