Fears over supply cause spike in wholesale gas price
Owing to the increase in demand caused by the snow conditions in Europe, National Grid issued a warning on 1 March that its supply may not meet gas demands in the UK. It was reported that demand surged 28% above the seasonal norm. Contingencies were made which included asking gas-intensive industry to reduce their consumption in the event of a deficit, but market responses saw an increase of supplies, alleviating the stress on the network.
While crisis appears to have been diverted, this has not been without effect on the wholesale gas price. Within-day prices rose 108% while the day ahead prices rose 6p. While bigger energy suppliers tend to hedge supply in advance – something which diverts the need for increased consumer prices – smaller suppliers may be forced to up their tariffs in response to the supply warning.
The wholesale gas price was further affected by a gas outage in St Fergus and Morcambe, as well as a Norwegian gas processing plant, which contributed to the atmosphere of fear and contributed to the spike in demand. National Grid continues to monitor the situation.
The team at BAS Energy is keeping a close eye on gas supply and demand as part of our dedicated service to our clients. If you have any questions about your gas contract or would like us to assist your business in finding contracts best-suited to your operations, contact us today. Our close relationship with leading suppliers positions us to negotiate, procure, and strategise your gas contract around your unique business needs.
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