UK Gas Prices Hit 2022 High as Winter Storage Lags
Wholesale gas costs have jumped to their highest levels in four years, driven by low European storage and Middle East tensions, setting the stage for a 16% increase in UK household bills in January.
By Haruka Ivanov ·
European wholesale gas prices reached €97 per megawatt-hour on Monday, the highest level recorded since 2022.
The price spike follows a drop in temperatures across the continent, which traders expect will boost demand for heating. In the United Kingdom, the month-ahead gas contract rose by 4% to 240 pence per therm. This marks the highest point for the contract since December 2022, when prices surged following Russia's invasion of Ukraine.
Market movements also reflect ongoing concerns about supply in the Middle East. Reports indicate that the United States and Israel have prepared plans for new strikes against Iran following the US midterm elections. These reports helped drive oil prices to $117 a barrel on Friday. Although the Brent crude benchmark eased by about 2% on Monday, it remains above $114 a barrel.
European gas storage levels are at their lowest point in over a decade as the continent enters winter. Export delays from Qatar and higher summer consumption for cooling have reduced reserve levels. Storage is currently 75% full, well below the seasonal average of roughly 80%. British energy regulators state that the UK will likely face some of the highest energy costs in Europe this winter due to its reliance on imports and small domestic storage capacity.
Data from the Office for National Statistics shows the UK spent a record £4 billion on power imports in the year through August. Half of that total covered electricity imported from France. The country also made near-record payments to restart gas plants while wind and solar operators received compensation for switching off due to grid bottlenecks.
Households in Britain are preparing for increased costs. Energy bills are projected to rise by 16% in January, which would bring the typical annual dual fuel bill to approximately £2,000. Stock markets showed slight gains on Monday as the drop in oil prices provided some relief. The Stoxx Europe 600 index rose 0.3% in early trading, while the FTSE 100 increased by 0.4%.
Source: The Guardian
