British wholesale gas prices reached new all-time highs on Tuesday, stoking concerns that a cold winter could deepen a crisis that has led to the collapse of multiple energy suppliers and stoked fears of factory shutdowns and soaring bills.
The price of gas for delivery in the winter months jumped by more than 20% to 218.4p a therm during late morning trading, as the existing Europe-wide gas price surge was exacerbated by a fall in supply from Russia.
The situation in the UK, where market prices have quadrupled in the past year, is particularly acute.
Global price rises have been compounded by the UK’s unusually low gas storage capacity, as well as outages in the electricity system, including a fire at a key power import cable, leading to increased reliance on gas power plants.
Consumers have been warned to expect higher bills and more household energy supplier failures, while heavy industry and the food and drink sector are facing the prospect of shutdowns and shortages.
The “winter gas season”, when heating demand is usually higher due to colder temperatures, starts on 1 October, and there are predictions of a colder-than-average winter.
Analysts warned lower temperatures could exacerbate the crisis.
“If the winter is colder than normal, natural gas supplies could run even shorter, leaving Europeans and possibly other countries, especially those that can barely afford current energy prices, in the cold,” said analysts at SP Angel.
Their counterparts at Refinitiv warned that even warmer-than-expected temperatures “might not be enough” to bring down prices.
“We conclude that additional supply is a key driver for prices to soften this winter,” they said.
But on Tuesday, supply dropped as the flow of Russian gas via the Yamal-Europe pipeline fell by more than half, the Interfax news agency reported, citing data from the grid operator Gascade.
As British gas prices for winter rose, other benchmark prices did the same, with the British day-ahead contract jumping 4.75p to 178.00 p a therm in
early morning trading.
The October gas price at the Dutch TTF hub, a European benchmark, was up €7.47, or 9.7%, at €84.00 a megawatt hour (MWh).