These price fluctuations have a knock-on effect: the price of electricity – often generated from gas – is spiking, while household suppliers are hitting the wall as catastrophically high wholesale prices make their businesses uneconomical. Seven UK supply firms have gone out of business so far this year. Bills for end users are forecast to rise 20 per cent, according to Citigroup.
It all makes for grim reading – particularly as gas remains a key source in powering our homes and business. But we should get used to it. According to some experts, it’s just the first flashing warning light on the dashboard of a car heading headlong into a prolonged, painful crash.
Almost everything that could go wrong with the energy markets is currently going wrong – and there are few easy fixes. First, take the climate crisis: our fixation on low-cost fossil fuels has engendered a situation that makes us more susceptible to supply shocks as we try and wean ourselves off the thing that helped cause the problem in the first place. “We always had these geopolitical risks,” says Adi Imsirovic, a senior research fellow at the Oxford Institute for Energy Studies, and a former oil trader with 30 years’ experience. “Now we have climate change risks that are essentially a premium on the prices.”
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