As a result of dipping temperatures in Europe, the United Kingdom wholesale gas prices have been duly affected, soaring to a nearly six year high on 6th February, 2012.
After examining European cities sub-zero conditions, the ministers of Italy warned to raise prices in order to hold alarming critical shortages of gas. Following such circumstances, the United Kingdom for the first time became the biggest supplier of gas to France. Germany, which was once the biggest exporter of electricity to France, drew back because of plunging temperature of -12°C in Berlin.
Up to 10 per cent reduction by Russia in gas exports have immensely influenced supply, along with sinking temperature of -10°C in Moscow inflicting injury to ongoing gas crunch.
ICIS Heren, analysts at gas market intelligence company said that the wholesale gas prices for upcoming delivery will hit 93p a therm in frenetic trading, which is marked the highest since March 2006.
One major reason for spiking prices is a result of the increasing sources of natural gas available in the United Kingdom, which were not around six years ago. The Milford Haven and the Isle of Grain are main liquefied natural gas import terminals. However, many Russian ships are unable to leave ports with gas supplies.
Overall estimates depict that the UK’s leading offshore gas storage facility is providing a maximum 45 million cubic meters (cu m) of gas into the UK’s network for the past five days. The Centrica-owned facility, 18 miles off the Yorkshire coast, is currently two-thirds full, containing 2.3 billion cu m of natural gas.
According to National Grid data, regular demand for liquefied natural gas was expected to be around 396.6 million cu m, which was 68 million cu m above the seasonal norm. However, the shortage of 13.4 million cu m means the demand from withdrawing from storage.
“There is an element of panic out there at the moment. People are expecting the price to be 20p lower next week, if this cold spell remains [the high prices] could continue. The cold weather will hit everywhere from Spain all the way to Russia,” said ICIS Heren’s Ed Cox.