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Financial Times: gas prices made the UK dependent on Russia

Financial Times: gas prices made the UK dependent on Russia

Financial Times reports, that gas prices in the UK and continental Europe have reached their highs due to the reduction in the supply of raw materials to the European market, which has already led to economic damage, which can increase in winter.

Financial Times: gas prices made the UK dependent on Russia

The rise in gas prices has become a threat to Europe

yesterday 14 September 2021 years, prices in the UK rose by 7% and made 1,65 pound sterling for term, which is three times higher than January prices.

Gas prices on the British market increased by 70% only from the beginning of August. Gas is a key energy resource in the UK energy sector, therefore, the cost of electricity generation in the United Kingdom is also breaking records.

Yesterday the gas price in the UK was 800 dollars per thousand cubic meters, but today she grew up again. The British market could not ignore the abnormal growth of spot quotations in the EU, who broke the mark in 950 dollars per thousand cubic meters.

Gas reserves in underground gas storage are a problem (PHG), they are usually renewed in summer, but in 2021 this did not happen. Two factors played a role here - a decrease in supply on the European market and high gas prices..

Financial Times: gas prices made the UK dependent on Russia Gazprom

European companies did not want to wage a price war with Asia, fearing to lose on gas resale during the heating season, and refused to purchase raw materials at a price of 350-400 dollars per thousand cubic meters, but the situation worsened, and quotes are out of control.

Financial Times notes a decrease in Russian supplies, which is not true - Russian transit increased in comparison with 2020 year, just not so, as the Europeans would like. In Europe, there is a dispute over the gas policy of the Russian side.

The actions of Moscow and Gazprom are explained as the need to replenish Russian UGS facilities, and the desire to push the launch of Nord Stream 2 from European partners. Europeans recognize, that Gazprom is in full compliance with its contractual obligations.

The situation was influenced by the gradual abandonment of Europeans from coal power plants, which limited the ability to switch energy from gas to another fuel during a period of sharp price increases. The reason for this was the introduction of payments for CO2 emissions.

The problem was aggravated by the lack of winds, because of what the wind turbines of Great Britain and Germany did not give the planned volumes of generation.

Financial Times: gas prices made the UK dependent on Russia

Everyone in Europe will pay for the rise in gas prices, but so far the situation is not so dramatic, as is the case with oil.

Industrial enterprises will be the first to feel the blow, as UK households are protected by flat rates, but they will grow. Ofgem in August increased the cost of electricity in the country by 12%, and this can happen again in autumn and winter.

Big problems in Spain: the government will return to households 3 billion euros in excess profits, received from utilities and will reduce the tax on the sale of electricity by a total of 1,4 billion. This will correct, but will not solve the problem of rising prices.

The situation can be saved by "Nord Stream - 2"

Financial Times considers the UK energetically more vulnerable, than other European countries.

British cut CO2 emissions by switching from coal to gas and developing renewable energy sources, but the country has smaller reserves of gas storage, than in Europe. Coupled with powerful production, this creates economic risks..

UK forced to compete for LNG with Asian markets, the country is increasingly dependent on a gas pipeline from the European Union, gas supplies from which are associated with Russia. In the event of a cold winter, the British may have difficulties.

Financial Times: gas prices made the UK dependent on Russia

ABF "Economics today»

The publication cites the weather as a key factor: mild winter will calm the market, partly like an increase in wind activity. Traders are also watching the launch of Nord Stream 2, the Financial Times believes, that any delay risks aggravating the situation.

S&P Global Platt proposes to switch from gas to oil, how is it happening in Asia, but the oil market began to grow today, updating local maximums and reaching prices in 76 dollars per barrel of Brent.

Dmitry Sikorski

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