Soaring global gas prices – how did we get here?
As the reasons behind the dramatic increases in global gas prices become better understood – first the post-pandemic recovery as economies across the world kicked back into gear, sending wholesale energy costs up, then the unfolding consequences of Russia’s war in Ukraine – the resulting investment uncertainty threatens to slow the UK’S transition to cleaner, greener energy for our homes and transport, warns Keith.
“At one level, the pandemic stopped nothing and changed nothing. The targets were still there, the investment was still coming through, the trajectory was still the same and that was good,” he explains. “But as we were coming out of the pandemic, every economy around the world was trying a massive growth strategy and we saw that have an impact on gas prices.
“That created some concern around the world, including the UK, about how we were going
“Volatility creates massive uncertainty in the market”
to manage that, what impact was that having economically in terms of inflation and business investment; what impact was that having on the end consumer in terms of the prices?”
It also has the effect of slowing the growth that seemed within tantalising reach for the UK, with cash-strapped households no longer in a position to consider switching to an electric heat pump or electric car without financial incentives.
The invasion of Ukraine led to an even steeper increase in prices. Keith says: “Probably even more concerning than that was the massive volatility – rising and falling by up to 100 pence a day – and that volatility creates massive uncertainty in the market. And so that leads everyone to start questioning how we find a way through that.
“It shouldn’t make you question in any way, shape or form, getting to net zero or investing in renewables. If anything, it should encourage you to go faster. But it does create investment uncertainty, and it creates concern, and that has a habit of slowing things down, which doesn’t help anyone.”