Ministers prepare for worst in gas price crisis

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The UK’s energy system has been plunged into chaos by a perfect storm of market forces which threatens to rip through the economy from home energy suppliers to heavy industry, and from factories to farmers.

This has stoked fears that a wave of energy suppliers will collapse, and that households will be saddled with unaffordable bills. As the colder weather draws in, these are the factors shaping the energy crisis.

Small business minister Paul Scully told the BBC his department was working closely with regulator Ofgem to protect customers if more firms went bust.

Nearly 1.5 million customers have been hit in just two weeks by energy firms collapsing under soaring gas prices.

Among them are Avro Energy and Green, which ceased trading on Wednesday.

Their 830,000 combined customers face being switched to a new, potentially more expensive, provider.

All affected customers will still receive energy while a new supplier is appointed by Ofgem.

Smaller providers launched in recent years have been overwhelmed by a global spike in wholesale gas prices, as economies have reopened from lockdowns and high demand from Asia has pushed down supplies to Europe.

Russian gas games

As shipments of gas have turned from Europe towards China, flows of pipeline gas to Europe from Russia have failed to make up the shortfall.

On Monday gas prices across Europe surged by another 10% after Russia’s state-backed gas company, Gazprom, refused to increase its exports to Europe – despite record-high prices across the continent.

The company has met its contractual obligations for gas delivery over recent months but Gazprom has come under fierce criticism for appearing to send little extra to help meet the enormous demand in Europe.

As shipments of gas have turned from Europe towards China, flows of pipeline gas to Europe from Russia have failed to make up the shortfall.

On Monday gas prices across Europe surged by another 10% after Russia’s state-backed gas company, Gazprom, refused to increase its exports to Europe – despite record-high prices across the continent.

The company has met its contractual obligations for gas delivery over recent months but Gazprom has come under fierce criticism for appearing to send little extra to help meet the enormous demand in Europe.

In Europe, demand for coal as an alternative power source has also risen significantly. But options for switching to alternative sources of energy are limited in the region largely due to government policies aimed at encouraging the use of gas over more polluting fuels such as coal.

The glass industry was historically run on fuel oil, but almost all sites in the United Kingdom have now transitioned to natural gas, according to Paul Pearcy, federation coordinator at British Glass, a UK trade association. Only a few sites have fuel oil tanks that enable them to switch energy source if prices skyrocket, he added.

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