Jeremy Warner's Outlook: Britain has squandered its North Sea inheritance. Now we are paying the price
With oil and gas prices now sky-high, there's virtually nothing left to see us through the famine
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Both the spot and forward price of wholesale gas rose to record levels again yesterday, making steep increases in gas bills this winter a virtual certainty.
There are a number of reasons for this phenomenon, and profiteering by suppliers is not really one of them. The most significant is the rising price of oil. Gas prices on the Continent tend to be linked by contract to the oil price, so that, if the price of oil rises, so too does the price that suppliers and consumers have to pay for their gas.
In Britain, we used to be partially insulated from these shocks by plentiful supplies of North Sea gas, yet these are now fast depleting. Our reliance on imported gas is rising fast. From 27 per cent of need last year, it is set to rise to around 40 per cent this year, 75 per cent by 2015 and some 90 per cent by 2020. This makes us more exposed to inflated world prices.
What's more, because the oil-related price on the Continent tends to be higher, our European neighbours have been shopping with impunity for cheaper gas here in the UK through the interconnector.
Gas use and therefore prices should be relatively subdued at this time of year. Yet the continentals are ensuring that demand remains strong right through the warm summer months. It's cheaper for them to buy our gas than alternatives, or to draw on reserves kept in storage. In some cases, continental storage facilities are being replenished from still relatively cheap British supplies in anticipation of much higher prices to come this winter.
Too late now, but Britain has squandered the blessing of North Sea oil and gas by allowing the stuff to be bought up at relatively cheap prices during the years of plenty. With prices now sky-high, there's virtually nothing left to see us through the famine. At no point was any serious thought given to a more strategic use of our oil and gas reserves. We are now paying the price.
Subscribe to Independent Premium to bookmark this article
Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Premium subscription today.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments