Soaring Gas Prices Already Hitting Industry

EIUG welcomes Ofgem’s belated call today for action on Gas prices. EIUG had called for such an investigation two months ago (see Press Release of 11 October 2000), and has been voicing its concerns with Ofgem and DTI since April this year. Meanwhile, industrial customers have already been suffering unprecedentedly high gas prices.The gas price crisis has finally worked its way up the political agenda, with contributions on this morning’s Radio 4 Today programme confirming that domestic bills could rise by 25% or more next year.

By contrast, large industrial consumers are already paying vastly increased prices – EIUG members report contract prices having risen by 60-100% this year.The situation is of grave concern to energy intensive users operating in highly competitive markets, and to chemical businesses which use gas as a feedstock.

EIUG’s members are suffering an increase in gas costs of over £500m per year.The price rises have occurred as UK prices, influenced by sales through the interconnector to Belgium, have risen to continental levels where contract prices are indexed to oil. UK customers – who should be benefiting from a liberalised gas market – are therefore loosing out. EIUG suspects market manipulation, and believes that the behaviour of continental gas monopolies and effects of concentration of market power offshore should be investigated.EIUG has lobbied Ofgem, DTI and the European Commission on the crisis over the last two months and received a sympathetic hearing, but is frustrated that no action has yet been taken.

Jeremy Nicholson, EIUG’s economic adviser, said today: “Industrial customers cannot wait until the full effects of the crisis are felt by domestic customers. We need action – and we need it now.”

Notes to editors:

  1. Wholesale gas prices have more than doubled this year – contract prices to large industrial customers have typically risen by 60-100% to around 26p/therm.
  2. The interconnector is regulated by DTI (also sponsor of the offshore gas industry)
  3. For further information please contact Jeremy Nicholson on 07785 280 568 (mobile) or leave message with secretary on 020 7343 3166.