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Gas prices experience ‘super-spike’

A technical fault with the UK-Belgium gas interconnector pipeline last week lead to gas prices experiencing what traders are referring to as a ‘super-spike’.

The last thing UK businesses need right now is further cost and uncertainty. Business energy prices are sure to feel any pain first. Indeed, this brings further bad news for large industry consumers amid the recent talks of energy shortages due to the continued March cold snap.

The pipeline fault has put further strain on the UK’s energy resources and should the pipeline remain shut for a further few days, there is fear that the grid operator may be forced to resort to emergency supplies and negotiate demand reduction for larger gas consumers.

That could cost UK businesses dear. Businesses are already suffering from price rises in business energy and with another influencing factor being added to the mix it spells real financial danger.

However, the National Grid says that it doesn’t expect to have to resort to these measures and that gas prices closed at what it considers to be a ‘healthy’ position.

It is unlikely that UK businesses will have the same confidence.

The best advice for large gas consumers is to be increasingly vigilant of their operational and non operational gas use, and for this short period only use what is necessary to ensure continued operation without jeopardizing your business.

As with any business, the message is to use the resources you have efficiently and to ensure that your energy contracts are up-to-date to avoid further price shocks.

The recent price of gas is just another indicator of what has been an ever increasing forward curve in pricing, so commercial gas consumers should be engaging with an independent energy broker and agreeing longer term contracts for their gas, fixing while the market is relatively healthy, and before additional long term price risks have been factored in.

We’re moving into the warmer seasons and would traditionally expect a softening of prices. However this year is different with no end to the unseasonal weather in sight.

While there is hope that after the fault in the import line is fixed, prices will return to what we should now consider as relatively normal figures, we still have the backdrop of low reserves, cold weather and an ever rising energy price.

Informed procurement is key, business energy is an ever-increasing element of a business’ cost, regardless of their size, and now more than ever is the time to lock in some certainty for the future.

If it catches out the traders we know there’s an impact coming on the end-user – UK business be aware.


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