Gas Market Price Spikes – Market or Manipulation?
In the wake of dramatic price spikes in the wholesale gas market yesterday, EIUG reiterated its demand for an investigation into market manipulation. Within-day prices surged to 50p/therm on Monday 15 January, ending the day at close to 40p/therm. Market observers were unable to attribute the rise to legitimate supply/demand effects – supplies were understood to be plentiful, and demand was well within the January norms.Some observers have pointed the finger of suspicion – yet again – at the role of the interconnector.
EIUG has long recognised that use of the interconnector is a key factor influencing the market. Strangely, the interconnector has just resumed flows away from the UK despite UK prices exceeding those on the continent. Those with a financial interest in the interconnector’s operation have yet to come up with a convincing explanation for this. The situation is not helped by the secretive way in which the interconnector is operated. The suspicion is growing that major stakeholders in the pipeline have been ramping up prices for their own benefit.
EIUG has repeatedly called for the government to take action, and supports calls for the OFT to launch a formal investigation. The sustained price rises have been hitting industry since early last year, and are now threatening prices in the domestic sector.
Jeremy Nicholson, EIUG’s economic adviser, said today: “The government has powers to deal with market abuse and it’s high time they were used. We can’t afford to wait – we need firm action now.”
Notes to editors:
- Wholesale gas prices more than doubled last year – contract prices to large industrial customers have typically risen by 60-100% to around 26p/therm, adding £500m to energy-intensive industry’s gas bills.
- The interconnector is regulated by DTI (also sponsor of the offshore gas industry)
- For further information please contact Jeremy Nicholson on 020 7343 3159, 07785 280 568 (mobile) or leave message with secretary on 020 7343 3161.