UK Businesses Urge Government to Deal With Energy Prices or Face Shutdowns and Chaos, Report Says

© AFP 2022 / FETHI BELAIDFacilities of the Chergui gas field concession of the UK based oil company Petrofac on the island of Kerkennah. (File)
Facilities of the Chergui gas field concession of the UK based oil company Petrofac on the island of Kerkennah. (File)  - Sputnik International, 1920, 09.10.2021
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According to the trade association Oil and Gas UK, wholesale prices saw a 70 percent spike in August and have seen a 250-percent jump since the beginning 2021. The pricing crisis has hit all of Europe, but Britain has been the worst affected, with price hikes having had knock-on effects on other industries.
UK businesses have urged the government of Boris Johnson to take action to reduce energy prices as well as support industry players, warning that a failure to do so will result in shutdowns of factories and chaos, local media has reported. Business Secretary Kwasi Kwarteng was told during a Friday video call that electricity costs were "not sustainable" for some companies, which risk irreversible damage if they are forced to turn the power off.

The meeting was attended by representatives of energy-intensive sectors, including steel, chemicals, paper, glass, cement, and ceramics.

According to The Independent, during the video call Mr Kwarteng said the government was "keen to help our industrial base", but industry sources told the newspaper that the official failed to announce any action or provide guarantees, with business representatives branding the video call a listening exercise.

UK Steel Director Gareth Stace said the government has to take action now.

"Energy prices are so high that some companies have been forced to suspend production even at a time when the market for steel is incredibly healthy. We can't wait until Christmas and beyond. Or even a few weeks. We need action now, it needs to be swift, decisive action", he said.

Mr Stace's statement was echoed by that of the director-general at the Confederation of Paper Industries, Andrew Large, who said there are "serious risks of factory stoppages as a result of the costs of gas being too high to bear".

'Crisis Made in Downing Street'

The call for swift action was supported by several conservative MPs, who urged ministers to take action against soaring prices. Andrew Bridgen, Conservative MP for North West Leicestershire, said he would support government intervention to help industries affected by the ongoing crisis.
"However, what we need... is a sustainable long-term energy policy based on diverse sources of supply", he said.

The development comes as the Office of Gas and Electricity Markets (Ofgem) warned of a "significant" rise in heating costs for Brits in spring. Ofgem has already raised the energy price cap (the maximum price that energy suppliers are allowed to charge customers) to £1,277 ($1,751). Industry sources told The Independent, that Britons may expect a massive 34-percent jump, with prices for an average household skyrocketing to £1,700 per year ($2,314).

The ongoing energy crisis has been exacerbated by the shortage of heavy goods vehicle drivers (HGV) in the country, which in turn led to problems with fuel supplies and disruption of food deliveries to supermarkets. The opposition Labour Party has blamed Boris Johnson's government for the crises.

"This is an energy crisis made in Downing Street. Kwasi Kwarteng is scrambling to meet industry bosses but he is all talk. This chaotic Tory government got us into this mess in the first place and has no plan to address it. Warm words at a meeting will be cold comfort for consumers and business who are facing ever increasing energy prices and a cost of living crisis", said Shadow Business Secretary Ed Miliband.

Both the shortage of HGV drivers and the spike in energy prices have affected other industries. The UK's two largest fertiliser plants, which produce CO2 (a gas used in the food industry to extend the shelf life of products) have since suspended operations due to the hike in gas prices.

Industry players have already warned that Christmas risks being cancelled if the authorities fail to find a solution to promptly deliver progress. But it appears that the situation has already become dire as the Office for National Statistics revealed that one in six adults in the United Kingdom have been unable to buy essential food items in shops in recent weeks.

As mentioned earlier, the pricing crisis has affected all European nations as well as countries in Asia, but Britain has reportedly been the worst affected. Experts highlight several factors that have contributed to the problem.
the cold winter last year put pressure on supplies, which subsequently led to growing demand;
competition for liquefied natural gas supplies between Europe and Asia;
a significant drop in supplies of renewable energy due to a windless summer;
a recent fire at a plant in the UK damaging a power cable supplying electricity from France to the UK.
According to the BBC, which cited a government source, the authorities are now working with the industry "on their suggestions". Reports say that the introduction of a price cap for energy suppliers is among the suggestions being tabled.
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