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The people of Great Britain stare helplessly at energy bills

The people of Great Britain stare helplessly at energy bills

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In recent days, the number one topic in the UK has been the panic of distributors. Scenes straight from the 1970s energy crisis caused a shortage of truck drivers, damaging gas station supplies. Boris Johnson’s office reacted quickly to the problem. Soldiers were set to replenish supplies; He also promised to shorten the procedures for applying for a driver’s license for heavy goods vehicles. The government also decided to mobilize relevant license holders to send letters urging them to return to the profession, and to offer several thousand work visas to drivers.

And while gasoline prices have been at their highest in seven years, sightings of Dantesque at the fuel pumps may be a thing of the past in just a few days. The British will have to deal with the crisis caused by high natural gas prices. The cost of the contract for the supply of blue fuel at the end of October from the beginning of the year on the ICE exchange increased more or less than fourfold. Meanwhile, natural gas is responsible for 36 percent. Electricity production in the UK. It heats up about 80 percent. families. They will soon feel the effects. On October 1, new tariffs set by Ofgem (equivalent to our Energy Regulatory Authority) came into effect, which provide for the highest price increase for natural gas and electricity in a decade. Most consumers won’t be able to pay more than £1,277 (6,800 PLN) a year (Ofgem sets an upper limit for electricity and gas bills; most retailers sell both). Distributors say it’s still less than £500 at break-even at current prices.

So you can say that consumers are protected. However, distributors have a problem. The market for sales of gas and electricity in Great Britain is highly fragmented – dozens of companies of different sizes operate there, and some operate at very low margins. As long as natural gas and electricity prices are low, the business is paying off. However, the necessity of making additional payments to customers means that the bill is no longer strained.

As a result, seven companies have withdrawn from the market in the past two months. Just last week, Avro Energy and Green went bankrupt, serving 835 thousand. consumers. Their customers are now being taken over by other operators, but they do so reluctantly, as this means they will have to add more to the business. “You don’t need those customers,” said Keith Anderson, head of ScottishPower, the UK’s fifth largest supplier, a few days ago. British media are speculating that the harsh winter may drown out more businesses; It is said that only 10 may survive.

At the moment, however, the government is in no hurry to save the industry. Minister Kwasi Quarting, who is responsible for business regulation and the energy sector, recently confirmed to the House of Commons that his department is preparing for various scenarios, including some form of government assistance. However, he added that, as a rule, he prefers businesses to deal with their own problems. “This is not a free market, so it would be foolish to suggest that he would solve his problems himself,” Del Vince, president of EcoTricity, a green energy supplier, commented in the Financial Times.

Meanwhile, higher blue fuel prices backfired in completely unexpected parts of the economy. In the middle of the month, the food and meat industries were scarring. reason? The danger of a breakdown in the supply of carbon dioxide used in the production of food for soft drinks, as well as in the slaughter of animals. The reason is the suspension of ammonia production by the American company CF Industries, which has two plants in Great Britain. Carbon dioxide is a by-product for them, but they are responsible for 45%. This gas is supplied to the British market. After government intervention, the Americans restarted one of the factories.

but that is not all. British industry complains of high electricity prices. Gareth Stace of UK Steel complained to Reuters that some factories had to shut down production during the times of the day when electricity costs were at their highest in recent weeks. An anonymous source from the British Steel Company indicated that profitable steel production was impossible during these hours.

Britain’s energy dilemmas will not end soon because they are a combination of internal and external factors. For example, while other European countries have gas storage facilities that can last up to twelve days in the winter without fresh supplies, the UK is able to survive up to five (the government has shut down the last large blue fuel storage facility). for savings in 2017). In addition, there is a greater than usual demand for natural gas globally, resulting, inter alia, from the epidemiological unfreezing of economies, which affects not only Great Britain. However, if Europe experiences another cold winter, the climate in the Thames will again resemble the hot 70s.

Yakub Kabyshevsky, 09.30.2021

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