Keeping the Gas On

As I write these words, on the second day of Spring after a long hard cold and wet winter in London, it is now snowing and the snow is settling on the roof tops and on the cars. Spring snow is rare, not quite as scarce as hen’s teeth, but an event to be noted.

In the United Kingdom people must now keep their central heating on at a time when they hoped to turn it off. More than 60% of UK homes (there are around 22 million homes in the UK) are heated by natural gas through the natural gas network. British Gas serves about half of these homes and is making a splendid profit in doing so. It will make more soon, because tyhe unnatural cold weather will mean more gas consumption and natural gas whole prices in the UK doubled very recently when the pipeline bringing natural gas from Russia failed in Belgium, cutting off an important supply to the UK.

British Gas will welcome the opportunity to pass on any price rise to consumers but if form is anything to go by British Gas will be reluctant to lower its prices as quickly as it put them up, if wholesale prices fall.

Gas is a regional commodity, rather than an international one, because of the costs of transporting it from one place to another. In the USA as a result of fracking shale gas, gas prices have fallen by 31% on the past year. Gas bearing shale deposits are easy to access in the USA; in the UK our shale deposits are deeper and less rich in gas, so tapping this source of energy will not result in shed-loads of cheap natural gas.

The cold weather in the UK is forecast to last until Easter at least; Easter comes very early this year (except in the Greek Orthodox Church) and with the gas pipeline cut off in Belgium the UK will have to last on other supplies and on its reserves. The UK is quite foolish about reserves of natural gas; whoever is responsible (I suppose it must be the wretched Energy Minister or the succession of Energy Ministers over the past ten years all of whom have been men of very little brain) has left the UK in a position where it can only store 15 days worth of natural gas. Bear in mind the 80% figure and the fact that natural gas powers most of the UK’s power stations that produce electricity having a capacity to store only 15 days worth of natural gas exhibits gross incompetence.

Energy companies are not penalised if they run out of natural gas; in fact they can usually make this event a profit generator. They have no legal obligation to store more natural gas and prefer to operate on a just in time basis, keeping their cash in the bank rather than investing it in stock and storage.

It seems that the UK’s gas storage facilities, theoretically capable of holding 15 days’ supply, are now down to their last two day’s supply. For years Energy Ministers have been worried about keeping the lights on. They had they eyes on the wrong ball; they should have been worried about keeping the gas on.

2 Responses

  1. […] Keeping the Gas On (robertkyriakides.wordpress.com) […]

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