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Why is there a gas shortage?

THE UK is in the grips of a gas shortage as prices rocket more than 250 per cent since January 2021, according to reports.

The Government is in crisis talks with energy suppliers over curbing the rises and keeping the industry afloat.

Gas prices have shot up some 250 per cent since January 2021

Why is there a gas shortage?

Business Secretary Kwasi Kwarteng held talks with energy suppliers at the weekend and is planning an emergency summit with gas industry heads on Tuesday, September 20, 2021, o discuss how to curtail spiralling gas prices.

It comes as Industry group Oil & Gas UK said wholesale prices for gas are up 250 percent since January, according to a BBC report.

Bulb, the UK’s sixth-largest power company with 1.7 million customers has also sought a bailout from the government.

No 10 is considering emergency state-backed loans to help firms weather the recent dramatic surge in prices while smaller suppliers face collapse.

On Sunday, COP26 President Alok Sharma told the BBC’s Andrew Marr show: “We do not see risks of supplies right now and prices are being protected.

“We have the energy price cap, we have the warm homes discount, to protect people at this particular time.”

Experts have warned of food shortages and a pause in surgical operations because of a lack of medical equipment.

The shortage is being caused by tight gas supplies ahead of winter.

Why are prices so high?

Brits are experiencing a rise in gas prices because of a spike in the wholesale cost of buying the vital energy source.

High prices have already forced two large fertiliser plants in Teesside and Chesshire, which produce carbon dioxide as a by-product.

On top of food and medical supply shortages, Brit households could face a mammoth £400 jump in power bills, according to some estimates.

A derth of food supplies is being caused in part by a CO2 shortage. The gas is used in the production and transport of a wide range of products such as meat, bread and beer and without it, the meat industry says, supplies of pork and poultry could “disappear off the shelves”.

Greg Jackson, chief executive of Octopus Energy – one of the UK’s six largest providers – said this was “the most extreme energy market in decades”.

He told BBC Radio 4 small energy companies faced “an unprecedented crisis” and that “millions of customers and thousands of people’s” jobs are going to be affected.

AP
Business Secretary Kwasi Kwarteng is holding emergency talks with gas industry bosses on September 20, 2021[/caption]

What energy suppliers have gone bust?

The Lanchashire post reports that as many as 60 energy companies could collapse even before the year is over.

That would mean there would only be 10 suppliers remaining.

Earlier in the week, comparison giant, Compare the Market, had to remove its switching service as it felt it couldn’t provide customers with enough quality choice tariffs to decide between.

The service freeze is due to only be temporary, but as of yet it still remains offline.

Meanwhile, hundreds of thousands of Brits have been left in the dark already as their providers collapse.

Utility Point and People’s Energy have already folded, along with a host of other small providers who’ve met the same unfortunate fate.

But more energy firms could go bust over the coming weeks according to the Business Secretary yesterday.

Bulb, the UK’s sixth largest provider, is among firms seeking a government bailout.

But it’s thought many more smaller firms could collapse in the coming days as firms crumble under the weight of surging wholesale costs.

Energy companies to go bust so far this year are:

  • HUB Energy (Bust on August 9)
  • PFP Energy (Bust on September 7)
  • MoneyPlus Energy (Bust on September 7)
  • Utility Point (Bust on September 14)
  • People’s Energy (Bust on September 14)

If your supplier folds, your energy won’t be cut off, so there’s no need to panic.

In the meantime, Ofgem will arrange an interim supplier so you won’t have to go without.

Customers affected will be contacted by the new supplier, which will be chosen by Ofgem. 

What caused the gas shortage?

Natrual gas prices have skyrocketed in recent weeks in Europe because of low supplies.

A problem with the supply chain and lower solar and wind output are to blame.

On top of that Britain imports some 60 per cent of its natural gas supply, the Department for Business, Energy and Industrial Strategy reported in 2020.

In August, that rose by more than 70 per cent, according to i news, and pushed some retailers out of business.

Some are pointing to the prolonged 2020-2021 winter that drained natural gas stocks, which weren’t replenished during the summer months, when demand is low.

Others say low solar and wind output caused by a run in less windy weather and the phasing out of coal-powered plants in recent years has dented supply to the grid and forced natural gas prices to accelerate uncontrollably.

Another theory is that Russia is sending less gas to Europe as exports this year dropped to around one-fifth of pre-pandemic levels, according to i news.

Some believe Moscow is curbing its foreign supply to fill its own tanks while others say Russia is trying to pressure EU governments into approving its controversial Nord Stream 2 gas pipeline.

Where does gas come from?

Gas comes form multiple sources.

The natural gas that we use to heat our homes and water comes from deep under the earth, according to Alliant Energy.

The gas is found in layers of rock with tiny holes and to bring it to the surface, gas companies drill down hundreds of feet and pump it into pipes.

The gas comes from fossilised plant and animal matter from thousands, if not millions of years ago.

Over time, the tremendous heat and pressure created by the layers of earth turned the animal and plant matter into natural gas and petroleum (oil).

Once drilled, the gas is sent through mains buried underground, which utility companies then bring to your house in smaller pipes.



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