Live COVID-19 Cases
  • World 244,201,371
    Confirmed: 244,201,371
    Active: 17,997,316
    Recovered: 221,242,969
    Death: 4,961,086
  • USA 46,294,210
    Confirmed: 46,294,210
    Active: 9,504,119
    Recovered: 36,033,886
    Death: 756,205
  • India 34,175,468
    Confirmed: 34,175,468
    Active: 172,562
    Recovered: 33,548,605
    Death: 454,301
  • Brazil 21,723,559
    Confirmed: 21,723,559
    Active: 222,104
    Recovered: 20,895,886
    Death: 605,569
  • UK 8,734,934
    Confirmed: 8,734,934
    Active: 1,479,294
    Recovered: 7,116,179
    Death: 139,461
  • Russia 8,241,643
    Confirmed: 8,241,643
    Active: 845,122
    Recovered: 7,165,921
    Death: 230,600
  • France 7,120,863
    Confirmed: 7,120,863
    Active: 93,804
    Recovered: 6,909,596
    Death: 117,463
  • Spain 4,997,732
    Confirmed: 4,997,732
    Active: 62,168
    Recovered: 4,848,432
    Death: 87,132
  • Italy 4,737,462
    Confirmed: 4,737,462
    Active: 74,016
    Recovered: 4,531,644
    Death: 131,802
  • Germany 4,464,667
    Confirmed: 4,464,667
    Active: 162,473
    Recovered: 4,206,400
    Death: 95,794
  • China 96,758
    Confirmed: 96,758
    Active: 564
    Recovered: 91,558
    Death: 4,636
Generic selectors
Exact matches only
Search in title
Search in content
Generic selectors
Exact matches only
Search in title
Search in content
covid free office

BY Nandini Mehta


Gas Prices Have Panicked the UK Energy Industry

Smaller energy suppliers are struggling to match the price hike of gas.

SEPTEMBER 21  2021


As the price of gas rises, several UK energy companies have complained that they will be unable to stay afloat without funding from the government. The sudden spike in demand for gas globally has caused the energy industry in the United Kingdom to re-evaluate their financial standing as they strive to provide the supply they promised their customers despite the surge.

Why is this happening?

Although the price of gas has been rising over the last year, this surge has been aggravated by two key factors. First, a very cold winter season in Europe last year inevitably led to fewer supplies, leading to this shortage dilemma and less stored gas than normal.

Second, this cold winter has also catalysed increased demand in liquified natural gas (LNG) from Asia; such a huge region will undoubtedly impact the price scale for such a commodity, and so whether or not there is enough supply for UK companies to meet their promises to customers is looking questionable at best.

What is the current situation?

One of the largest energy companies, Bulb, is now trying its level best to stay in business. Talks with investment banks and an attempt to even out its balance sheet are just a few of the avenues that the sixth largest energy company has explored. This surge has evidently left many companies in a tough situation as they struggle to provide customers with the energy that they have already paid a lower price for.

Not only are four companies expected to go out of business, but a forecast suggests that out of the 70 energy suppliers in the UK at the start of the year, only 10 could potentially survive till 2022.

While gas prices have risen 250% since January, the good news is that if a supplier does fail to meet its commitments, Ofgem, which is an energy regulator, will guarantee that households do not lose their supply or the money that they are owed. For over 15 million residents of the United Kingdom, energy bills could see a hike of over 12%, starting October. Ofgem will review the price cap in February 2022, however, there is potential for the price cap to be lifted now so that struggling firms can increase their charges and fall into line with the current surge in pricing.


External implications

What may cause more concern is that this situation can have a knock-on effect on other industries. Supermarkets and food outlets claim that the rise of gas prices could also lead to a shortage of food-grade carbon dioxide, consequently endangering UK supplies of meat and fresh produce. The food industry has already called for action, warning of the severe consequences that food transportation and storage may face in light of the crisis. Four small companies have also shut down their practices recently, including People’s Energy, and Utility Point, both of which have over 500,000 customers and homes combined.

On a regular basis, the solution to helping a firm that was failing would be to increase its customer base. However, in this situation, increased customers would in fact put companies in more of a dire position, and so they have now turned to the government for help. Despite being forecast since the beginning of the year, the exponential rise of gas prices has left several companies with no resources or plan for the near future. Several are on the brink of shutdown.

While the government and energy companies try to meet halfway in order to save the industry and smaller businesses within it, one of the largest US companies to provide food-grade CO2 to the UK is now in talks with the government over crisis shortages. The Prime Minister has said that he is ‘very confident’ that the UK will be quick to fix the issues at hand and that supply chains will be able to withstand this with whatever assistance the government can offer. However, there has been no set plan as to how or where the government will offer aid and the Foreign Office seems keen on letting these companies fend for themselves.


About the Author: Nandini Mehta

Nandini Mehta is a contributing Features Writer focusing on the development of technology and business practices around the world. Nandini has an in-depth knowledge of politics and international relations, and so writes pieces that utilise her interest for current affairs.

Recommended for you

What is COP26 and Why Does it Matter?

The COP26 climate summit is on the horizon, but what exactly will it entail? Who is attending? And perhaps more importantly, who isn’t?