Wholesale gas up 16% as Russia puts squeeze on

BRITISH wholesale gas prices for October shot up 16 per cent yesterday amid fears that Russia will starve Europe of vital supplies.

Moscow is restricting the amount of gas supplied to the Continent via Ukraine next month according to the results of a key gas auction.

The decision will heighten fears that Russia is rigging prices to undermine the UK and the EU’s economic recovery from Covid-19.

There are also signs that Moscow could send less gas in through another pipeline, the Yamal-Europe.

Russia is thought to be withholding gas to pile pressure on European leaders to switch on a controversial pipeline, Nord Stream 2, which is built but still needs final approvals.

The squeeze on Europe next month will compound a mounting energy crisis in Britain that threatens to bankrupt dozens of small suppliers, bring the meat industry to a halt and leave beer taps running dry.

At the same time, the National Grid is turning to ‘dirty coal’ to help keep the lights on.

The UK’s three remaining coalfired power stations are on standby – or already being used – to fill gaps in the energy supply system. In September last year, coal was responsible for 0.5 per cent of UK electricity supply, but yesterday it was running some six times higher at 3 per cent.

UK gas prices for October surged by 16 per cent to reach 188.1p a therm yesterday, while benchmark European gas prices rose by 16 per cent to 75.33 euros per megawatt hour.

The energy crisis has been brewing for several months and low European supplies are a key part of this.

A long winter meant there was less gas in storage going into summer, but Russia sending less also means countries have not been able to build up critical stores ahead of winter.

Russia’s decision to cap additional supplies to Europe next month means time is running out. Storage facilities are around 72 per cent full – a level not seen at this time of the year for around a decade.

The UK does not have any of its own gas storage sites and a cold winter could force EU nations to send less power to the country.

Britain’s three coal-fired power stations are West Burton A in Lincolnshire, run by EDF, Ratcliffe-onSoar, Nottinghamshire, owned by Uniper, and the Drax power station near Selby, North Yorkshire.

West Burton A has been fired up on several occasions in recent days in response to requests from the National Grid. And it now seems likely the country will be more reliant on coal-fired electricity this winter.

‘Turning to dirty coal’