Government says energy security is ‘absolute priority’ amid rising gas prices

A former head of the regulator Ofgem warned Britain is likely to face high energy prices for the rest of the year.

Government says energy security is ‘absolute priority’ amid rising gas prices

The Business Secretary said energy security is “an absolute priority” as he prepared to hold talks with industry representatives amid concerns about a rise in wholesale gas prices.

Kwasi Kwarteng will speak to chief executives from energy suppliers and operators to discuss the extent of the impact of surging prices.

The rise has been blamed on high global demand, maintenance issues and lower solar and wind energy output.

A former head of the regulator Ofgem warned Britain is likely to face high energy prices for the rest of the year.

Dermot Nolan, a former Ofgem chief executive, said the increases were the result of depleted stocks following a cold winter last winter, reduced supply from Russia, and increased demand for liquefied natural gas from the Far East.

He told the BBC Radio 4 Today programme: “It is not obvious to me what can be done in the very short run. Britain does have secure relatively diverse sources of gas, so I think the lights will stay on.

“But I am afraid it is likely in my view that high gas and high electricity prices will be sustained for the next three to four months.

“It is very difficult to see what the Government can do directly in this regard.”

Mr Kwarteng tweeted: “Today, I’ll be speaking to chief executives of the UK’s largest energy suppliers + operators to discuss the global gas situation.

“We do not expect supply emergencies this winter.

“Energy security is an absolute priority. We are working closely with @ofgem and gas operators to monitor supply and demand.”

It is understood Mr Kwarteng has meetings on Saturday with senior executives from Ofgem, Centrica, National Grid, Energy UK, Octopus, Ovo, SSE, EDF, ScottishPower, Shell Energy, E.ON, Bulb and SGN.

Meanwhile, the Government is being urged by meat producers to step in to protect the food supply chain, after the sharp rise in gas prices resulted in a cut in the supply of carbon dioxide (CO2) to the industry.

Two large fertiliser plants in Teesside and Cheshire, which produce CO2 as a by-product, have shut as a result of the sudden hike in wholesale gas prices.

British Meat Processors Association chief executive Nick Allen said CO2 is essential to both the humane slaughter of livestock and extending the shelf-life of products.

He told the BBC Radio 4 Today programme: “If we haven’t got the CO2 supplies, on the packaging side that reduces the shelf-life of products going on the shelves at a time when we are really struggling because of all the transport problems.

“This has come as a huge shock, it has happened so quickly. I think everyone is outraged in the industry that these fertiliser plants can shut down without any warning whatsoever and suddenly take something which is so essential to the food supply chain off-stream just like that.

“We really need Government to step in now and actually do something.”

Ed Miliband, Labour’s shadow business secretary, said: “A basic duty of Government is to ensure secure, affordable energy supplies for businesses and families.

“It is a fundamental failure of long-term Government planning over the last decade that we are so exposed and vulnerable as a country and it is businesses and consumers that are paying the price.

“If we had been investing at sufficient scale in diverse, secure, zero carbon energy supplies and making energy efficiency a much bigger priority, we would not be in such a precarious position.

“Ministers must recognise the severity of the cost of living crisis now facing families as a result of rising energy prices and their unfair tax rise and cancel the cut to Universal Credit.

“They must also ensure security of supply and take the long-term action to put in place a much more robust, resilient and diverse energy infrastructure.”

OGUK, which represents the nation’s offshore oil and gas industry, said wholesale prices for gas have surged 250% since January with a 70% rise since August alone.

The body said the crisis coincides with discussions on whether to open new gas fields in the North Sea, adding that OGUK predicts that UK North Sea output will roughly halve by 2027 unless new fields are opened.

OGUK energy policy manager Will Webster said: “This price surge shows how we continue to need UK gas.

“Letting production fall faster than we can reduce demand risks leaving us increasingly dependent on other countries, and at the mercy of global events over which we have no control.

“While the UK continues to use oil and gas, we should make the most of the resources in our control while working for a low-carbon future.”

GMB general secretary Gary Smith said: “The situation shows that Britain must recognise the realities of our gas needs on the journey to net zero.

“Abandoning dependable domestic gas production while increasing reliance on imports is a wrongheaded approach to maximising security of supply and affordability.

“The supply chain pressures we see now are a worrying glimpse of what the future could be, unless we take start taking a pragmatic approach to our energy and industrial policy.”

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