British energy firms fear business collapse and gas crisis prices may surge 250%.
A rise in the gasoline price in the UK can create economical problems. Two more British energy firms ceased trading gas on Wednesday, which left over 800,000 consumers suffering from higher bills. British business minister Kwasi Kwarteng stated that a sharp spike in the gas price would be anticipated. He further added, we have to prepare ourselves for long-term high prices. Read on to learn more about a gas surge in the UK and natural gas energy.
Why Are Gas Prices Rising 2021: Here’s Why
Who Supplies the UK with Gas?
- A. Norway
- B. Netherlands
- C. Belgium
- D. All of the Above
The never-before-happened jump in natural prices will lead more British energy suppliers out of business, said the business minister on Wednesday. A 500% increase in the price of gas in the UK over the past year caused many providers to go hyper. This hike will cause hundreds of thousands of consumers to face more expensive packages. This increase will remain the same till next year. Kwarteng mentioned that Britain had strong systems to manage the company failures. The small companies who recently entered the market might not expect new state handouts to help through such a price squeeze.
What Is Causing Gas Prices to rise?
The riseThe BBC reported that start-upn the natural gas price has increased due to reopening from COVID-19 lockdown, and the high demand for liquefied natural gas in Asia helped decrease the supplies to Europe. Earlier meat producers suffered from high energy prices and ended production. Major production of gas was postponed due to the pandemic. Calm weather also contributed to the decrease in the amount of electricity generated by wind power.
Impact for Energy Firms
Uk has less gas storage than any other European country. Robert Buckley, head of relationship development at Cornwall Insight, told CNBC ththat e crisis had occurred outside suppliers’ control. This includes competition between Europe and Asia on gas deliveries. Another reason is the unavailability of US production facilities, severe EU carbon market norms, and other factors.
All gas suppliers are experiencing challenges at this moment, Buckley said. He further said that the situation will be getting worse before it gets better after seeing suppliers quitting the British electricity and gas market.
Bill Bullen, founder of U.K. supplier Utilita Energy, warnethat d the surge in gas price may lead to insolvencies in the energy sector.
As per a report from Cornwall Insight, in 2010, the six largest energy companies supplied the domestic energy market in the UK, i.e., 99.5%. In 2021, it had decreased to 69.9%
Start-up Bulb, the country’s sixth-largest supplier, is seeking a bailout, while four smaller competitors recently ceased trading, the BBC reported.’
The government is all set to take necessary steps to end the crisis, hitting consumers too hard. According to local media reports, the British government is planning bailout loans for energy suppliers. Prime Minister Boris Johnson also assured that this crisis is temporary, Bloomberg reported.