The UK government is scrambling to respond to a surge in natural gas prices that has forced the closure of fertiliser plants, driven up consumer energy costs and now threatens the supply of products from meat to steel.
Business secretary Kwasi Kwarteng held talks this week with officials from the business department’s “energy resilience unit”, according to aides, and has requested an urgent meeting with the chief executive of National Grid that could take place as early as Friday. The company declined to comment.
Soaring natural gas prices have stoked a surge in electricity costs, sending several smaller energy suppliers to the wall and leading price comparison sites this week to cut available tariffs or even remove their energy services altogether. Compare the Market, one of the biggest platforms, said it was pausing comparisons because “energy suppliers are currently restricting the number of tariffs available”.
“We could easily end up with less than 10 suppliers by the time we come through winter,” said Ellen Fraser of Baringa, a London-based consultancy.
The gas price surge has already hit the heavy industry, with the Energy Intensive
Users Group calling on Friday for “immediate steps in the face of unprecedented recent increases in energy prices to maintain the international competitiveness of a key economic sector”.
It is also causing chaos among makers of ammonium nitrate, a staple fertilizer derived from gas, as well as alarm among those that consume it.
Norway’s Yara International said on Friday it would curb production at several facilities in the EU and UK, adding to the shutdown this week of two large UK fertilizer factories owned by CF Industries of the US.
The Civil Contingencies Secretariat — the part of the UK Cabinet Office responsible for emergency planning — has met CF Industries to discuss the crisis.
The UK food industry is bracing for severe disruption after curbs to production of fertiliser, a byproduct of which is carbon dioxide used to stun animals before slaughter as well as in packaging.
The government on Thursday held emergency discussions with meat suppliers, which fear the knock-on effects of the gas price increases could seriously impede their supply chain within a week.