Share and Follow
Britain could be staring down the barrel of ‘significant risk’ gas shortages this winter, regulator Ofgem has warned as the supply from Russia to Europe has been all but cut off.
The regulator said the country might face a ‘gas supply emergency’, in a letter obtained by The Times.
Great Britain produces a lot of its own gas, but the majority is still imported. It has pipeline connections to Norway, which supplies a large amount of the country’s gas.
Britain imported very little Russian gas before the war, but will still be affected by the shortages likely to be faced in Europe.
During winter cold snaps Britain normally imports gas from storage sites in mainland Europe – it has very little storage of its own. But now European countries are likely to need this gas themselves after losing the supply from Russia.
Ofgem wrote: ‘Due to the war in Ukraine and gas shortages in Europe, there is a significant risk that gas shortages could occur during the winter 2022/23 in Great Britain.
‘As a result, there is a possibility that GB could enter into a gas supply emergency.’
And according to the International Energy Agency (IEA), a long and chilly winter – or a late cold snap similar to the 2018 ‘Beast from the East’ – could see the amount of gas in storage across the EU drop as low as five per cent this year.
There are fears this could lead to blackouts in Europe, with the IEA warning storage levels need to remain at 33 per cent until the Spring for ‘a safe and secure winter’.
And in a stark warning, the Paris-based intergovernmental group today said it could ‘not be ruled out’ that Russia could cut turn off the tap completely, as it continues to use natural gas as a ‘political weapon’.
Currently, natural gas storage is almost 90 per cent full across Europe – above the EU’s current target.
Currently, natural gas storage is almost 90 per cent full across Europe. But Vladimir Putin’s (pictured) Russia is continuing to squeeze supplies to Europe in retaliation to UK and EU sanctions following its invasion of Ukraine
Europe faces ‘unprecedented risks’ to its natural gas supplies this winter with Russia continuing to tighten the tap on its pipelines, a group of international experts have today warned. Pictured: Workers stand by a new natural gas pipeline in Poland
The IEA, whose members include the UK and the US, warns European countries could wind up competing with Asia to ship in already scarce and expensive liquid gas (LNG). Pictured: A graphic showing the cost of wholesale gas for the EU
But Vladimir Putin’s Russia is continuing to squeeze supplies in retaliation to UK and EU sanctions following its invasion of Ukraine.
Supplies of Russian gas to Europe are currently down by around 50 per cent this year, compared to 2021.
While the UK gets little gas directly from Russia, it is part of the European market and it therefore suffers the same effects of surging costs and huge competition for supplies.
The IEA, whose members include the UK and the US, warns European countries could wind up competing with Asia to ship in already scarce and expensive liquid gas (LNG).
It also urged homeowners to be ‘responsible’ with their usage this winter in order to help lessen the risk of shortages.
While the UK gets little gas directly from Russia, it is part of the European market and it therefore suffers the same effects of surging costs and huge competition for supplies. Pictured: A graphic showing the UK wholesale price of gas
Supplies of Russian gas to Europe are currently down by around 50 per cent this year, compared to 2021. Pictured: Where the major European countries import their gas from
The Paris-based IEA said in its quarterly gas report, released on Monday that European Union countries would need to reduce use by 13 per cent over the winter in case of a complete Russian cutoff amid the war in Ukraine.
Much of that cutback would have to come from consumer behaviour such as turning down thermostats by 1 degree and adjusting boiler temperatures as well as industrial and utility conservation, the group said.
Just a trickle of Russian gas is still arriving in pipelines through Ukraine to Slovakia and across the Black Sea through Turkey to Bulgaria.
Two other routes, under the Baltic Sea to Germany and through Belarus and Poland, have shut down.
Another hazard in the study was a late winter cold snap, which would be particularly challenging because underground gas reserves flow more slowly at the end of the season due to less gas and lower pressure in the storage caverns.
The EU has already filled storage to 88 per cent, ahead of its goal of 80 per cent before winter. The IEA assumed 90 per cent would be needed in its Russian cutoff scenario.
Businesses in Europe have already cut back natural gas use, sometimes simply by abandoning energy-intensive activity such as making steel and fertilizer, while smaller businesses like bakeries are feeling a severe crimp in their costs.
High prices for gas, which is used for heating homes, generating electricity and a host of industrial processes are feeding through to record consumer inflation of 10 per cent in the 19 EU member countries that use the euro and sapping so much consumer purchasing power that economists predict a recession at the end of this year and the beginning of next.
European governments and utilities have made up much of the Russian shortfall by purchasing expensive supplies of liquefied natural gas, or LNG, that comes by ship from countries such as the U.S. and Qatar and by obtaining increased pipeline supply from Norway and Azerbaijan.
The goal is to prevent storage levels from falling so far that governments must ration gas to businesses. Gas storage must remain above 33 per cent for a secure winter, according to the IEA, while levels below that risk shortages if there’s a late cold snap.
Lower levels also would make it harder for Europe to refill storage next summer, while higher reserves from conservation would help lower extremely high prices.
European leaders say the cutback in Russian gas is energy blackmail aimed at pressuring governments over their support for Ukraine and sanctions against Moscow.
Since Russia halted flows this month through the Nord Stream 1 pipeline running under the Baltic Sea to Germany, it and the parallel Nord Stream 2 – built but never operated after Germany refused to certify it – were damaged in underwater explosions that European governments say are sabotage.
Demand for liquefied gas has driven up prices and tightened supply to the extent that poorer countries in Asia cannot afford it. Bangladesh is experiencing widespread power blackouts, while Pakistan faces rolling blackouts and has introduced reduced working hours for shops and factories to save electricity.
‘Interregional competition in LNG procurement may create further tension, as additional European needs would put more pressure on other buyers, especially in Asia, and conversely cold spells in Northeast Asia could limit Europe´s access to LNG,’ the agency said.
The gas crisis in Europe has also deprived Asian countries of the limited number of floating regasification terminals, which were expected to play a major role in LNG imports in Southeast Asia. Europe has secured 12 of the vessels and plans another nine.
Russia has reduced flows through the Nord Stream 1 pipe which goes to Germany to just 20 per cent capacity, sparking panic
Pictured: A large disturbance in the sea can be observed off the coast of the Danish island of Bornholm on September 27 following a series of unusual leaks on two natural gas pipelines running from Russia under the Baltic Sea to Germany have triggered concerns about possible sabotage
Chimneys and a tank are pictured at the BASF chemical plant in Ludwigshafen, Germany, Tuesday, Sept. 27, 2022. (AP Photo/Michael Probst)
It comes as the already pricey cost of gas could rise even further as OPEC+ considers cutting output by more than 1 million barrels a day for its biggest reduction since the pandemic.
In early Asian trade on Monday morning, oil prices jumped more than 3 percent in a bid to support the market.
Brent crude, the global oil benchmark, fell to $87.96 a barrel last week – its swiftest decline since the pandemic set in.
The average price for a gallon of gas in the US is currently at $3.79 a gallon, the AAA reported.
The price rose for five days in a row last week after interest rates set by the Federal Reserve increased to 3.25 percent amid fears of a global recession.
Oil prices had been tumbling for four straight months since June, as COVID-19 lockdowns in top energy consumer China hurt demand, while rising interest rates and a surging U.S. dollar weighed on global financial markets.
To support prices, the Organization of the Petroleum Exporting Countries (OPEC+), which combines OPEC countries and allies such as Russia, is considering an output cut of more than 1 million bpd ahead of a meeting on Wednesday, OPEC+ sources told Reuters.
This significant production cut is poised to anger the United States, which has been putting pressure on Saudi Arabia to continue pumping more to help oil prices soften. The US is also looking to reduce revenues for Russia, as the West seeks to punish Moscow for sending troops to Ukraine.
OPEC+ accelerated some production cuts over the summer ahead of President Joe Biden’s visit to Saudi Arabia in July, when he controversially fist-bumped Saudi Crown Prince Mohammed bin Salman (MBS) as he arrived for a meeting with the controversial royal.
OPEC+ made a small increase in pumping oil in August but has since worked to reverse those actions.
The OPEC+ meeting will take place on October 5 against the backdrop of falling oil prices and months of severe market volatility which prompted top OPEC+ producer, Saudi Arabia, to say the group could cut production.
If the cut is agreed upon, this will be the group’s second consecutive monthly cut after reducing output by 100,000 bpd last month.
Beat the squeeze! Want to save £700 a year? Turn the heat down 1C, switch to LEDs and unplug your chargers
Daniel Jones, Consumer Affairs Editor for the Mail on Sunday
The new energy price guarantee came into force over the weekend, which means that a typical UK household’s energy bill is set to rise to £2,500 – from £1,971 – for the next two years.
While the increase is considerably less than previously planned, it is still double the average from just one year ago.
The exact amount you will have to pay will depend on how much energy you use. But as winter sets in, millions of consumers will face the choice between cutting back on energy or falling into fuel poverty.
Follow our handy tips and advice for quick and easy ways to save energy, reduce your bills and cut your carbon footprint.
1. COOL IT, JUST A LITTLE
If you turn down your thermostat just one degree, it will slash your heating bills and you may not even feel the difference. This could now save as much as £321 a year, says the energy supplier Utilita.
Most families are happy with a setting somewhere between 18C and 21C, but you may need it warmer for elderly or vulnerable people. Loop, an app that tracks smart meter data, warns that even leaving underfloor electric heating on for an extra hour a day costs £567 a year under the new cap.
(Stock Photo) Smart heating controls such as Hive, Nest and Honeywell can cut your bills and improve your comfort by making better use of the heating energy you pay for
2. PUT THAT LIGHT OUT
Lighting makes up about 11 per cent of the average UK household electricity consumption, so encourage your family to turn off any lights you are not using or when you leave a room. This will save you at least £25 a year on your annual energy bills, the Energy Saving Trust says. Use a sensor to control external lights so they are on only when they need to be.
3. GET AHEAD ON LED
LED (light-emitting diode) technology is the next best option to turning off a switch. Using up to 90 per cent less energy than conventional halogen light bulbs, LED bulbs are cost-effective, last longer and could save hundreds of pounds.
They do cost more to buy – but they last for ten years of regular use. Prices are coming down too. Even for brands like Philips they are down to £20 for six.
Moving to energy-efficient LED lighting saves the average British family (over a year based on the new electricity prices) £18 to £22 per bulb. That would save a typical home £300 a year, according to Signify, owned by Philips, which carried out the analysis. Similar analysis by smart lighting experts 4lite reveals that a single LED bulb now costs less than 4p a day to run based on six hours’ usage.
Older bulbs can cost as much as 20p a day.
4. TIME TO GET SMART WITH YOUR CONTROLS
Smart heating controls such as Hive, Nest and Honeywell can cut your bills and improve your comfort by making better use of the heating energy you pay for.
Consumer group Which? estimates that a medium-sized household could save at least £100 a year by using smart controls and cut the home’s carbon emissions by 320kg per year. Savings will depend on the efficiency of your central heating, and how you were heating your home before.
(Stock Photo) Household energy bills will rise to an average of £2,500 for the next two years
5. TAKE CHARGE OF… CHARGERS
You can save at least £65 a year just by turning your appliances off standby mode, says the Energy Saving Trust.
Consider getting a standby saver or smart plug which allows you to turn all your appliances off standby in one go. Some satellite and digital TV recorders may need to be left plugged in so they can keep track of any programmes you want to record.
Many consumers are unwittingly overcharging their mobile phones and other gadgets through a tangled maze of chargers.
Instead, as soon as your device is fully charged, get into the habit of unplugging it. This will save energy and prolong battery life.
6. BE CANNY WITH YOUR DAILY CUPPA
The Energy Saving Trust says that using less water in the kettle will save us at least £13 a year.
This is based on the average household boiling its kettle 24 times a week half-filled – three times more than required for a cup of tea or coffee. Its research found that filling the kettle with only as much water as you need has the potential to prevent two million tons of carbon dioxide being released into the atmosphere, in addition to saving households £1.1 billion across the UK.
7. HOW’S THIS FOR A WASH DAY RUSE?
Under the new energy price cap, average annual washing-machine running costs will increase from just over £63 to more than £117, says consumer group Which?
You can reduce this by not running the machine for small and light loads. It’s more efficient to wait until you can fill the machine to at least 80 per cent full.
Also, consider washing at 30C, which will cut energy use by 38 per cent on average compared with a 40C wash, while washing at 20C will use 62 per cent less energy.
Avoid the tumble dryer. Dry clothes on racks or outside to save more money.
