Issues in Europe
The ongoing conflict between Ukraine and Russia posed a significant challenge to the EU's energy sources last year, as the reliance on gas imports from Russia quickly became unsustainable. As a result, storage downfalls forced the EU to look for alternative energy sources in order to ensure an uninterrupted supply of energy. This means that the import of liquid natural gas is likely to increase this year as the EU looks for new ways of ensuring sustainable and reliable access to resources.
With the Equinor bosses forecasting difficulties in increasing outputs or up storing production from last year, Europe may be forced to look abroad for liquified natural gas (LNG) contracts. The US has been flagged as one of the potential sources for such agreements, however, there is still some uncertainty surrounding geopolitical issues that could pose problems if Europe goes down this route. To stay competitive on the global stage and secure a steady supply of LNG, strategic decisions must be made now to ensure continuity - not only in terms of domestic stocking but long-term development too.
Uks storage issues
With gas prices continuing to rise and fall, the UK is taking the gamble that prices will start to move downwards. This has seen investment in renewable energy sources drop, which could ultimately be to the nation's detriment if gases don't eventually become more affordable. To safeguard against such a situation arises, it is necessary for the UK to strengthen its access to gas storage resources. Experts are urging the government to increase their gas storage capacity before next winter in order to ensure that energy prices don’t skyrocket and blackouts can be avoided. Ultimately, this would help make sure the UK is better off in an ever-fluctuating market of gas prices.
Inaction from the government has put the UK's energy security in a precarious state. With Centrica Rough storage facility limited to operating at only one-fifth of its previous capacity and no apparent agreement in sight for full utilization, analysts are predicting major vulnerability to gas price spikes if immediate expansion measures are not taken. This is concerning given the unpredictability and volatility of the energy market following last year's events, as too much reliance on fluctuating foreign prices may hurt both businesses and households in the long run. It is imperative that efforts are made now to secure our own autonomy before it's too late.
Why this could cause rising energy bills
The impact of the EUs struggles are sure to have a knock-on effect on the UK and our reliance on European gas suppliers. Currently, the UK already relies heavily on Norway for 25% of its annual gas demand, due to lack of storage capacity in our own country. This lack of security when it comes to gas supply creates further reliance on deals from the EU, leaving us vulnerable and uncertain in regards to our upcoming winter. This highlights not only the increasingly urgent need for reforms in our energy policy but also just how much more interconnected all parts of Europe really are.
The UK is feeling the strain of the energy crisis as wholesale gas prices in August 2022 reached an eye-watering 598p/them. This shows just how volatile and unpredictable the markets have been since 2021, with even pre-covid levels being a distant memory. Fortunately, there has been some respite, as gas prices in January were around 132p/them - still higher than what we were used to before the pandemic but considerably better than before. Yet with European countries also heading towards energy struggles, it's clear that relying solely on imports from places like Norway won't be enough to ensure energy security in the UK.
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