Susanna Twidale, Noah Browning

LONDON (Reuters] – Rising oil prices could force a switch from gas to the fuel and make more British energy suppliers redundant. On Thursday, industry associations called for government intervention to stop any disruption in supply this winter.

The rise in natural gas prices has been a major factor, especially in Europe. This is due to lower than usual stocks, reduced supplies from Russia, the advent of colder weather and outages.

Analysts have predicted v an increase in global crude oil demand by several hundred thousand barrels per daily (bpd), increasing already limited supply as more countries turn to oil for power this winter.

High energy prices, both in Britain and Spain, have caused many industrial firms, including steelmakers and fertiliser plant, to reduce production. This has even lead to food shortage warnings.

China has felt the squeeze as well, with authorities limiting power use.

This has never been seen before on such an international scale. “The market has tried to replace expensive oil with much less costly oil,” Bjarne Schildrop, chief SEB commodities analyst said about the current reversal as oil users switch to it.

This month, just before the international climate negotiations kick off in Glasgow (in a month), we see that oil has reversed its course. It highlights how difficult it is to reduce emissions and move to cleaner sources of energy.

There are still some things Britain can do. National Grid (LON:) warned https://www.reuters.com/business/energy/britains-national-grid-says-can-meet-gas-demand-this-winter-2021-10-07 that the country faces tight electricity supplies this winter on rising demand and capacity constraints, although a top official said he was confident it will keep the lights on.

Prices will not be lowered if there is no action taken by the 12 energy suppliers that have collapsed already this year. High wholesale prices for gas in Britain has pushed up wholesale power prices, as gas makes up around 40% of all electricity generated in the country.

More British energy suppliers are likely to exit the market bust, regulator Ofgem said https://www.reuters.com/business/energy/uk-energy-regulator-says-more-suppliers-may-go-bust-over-high-prices-2021-10-07/#:~:text=Nine%20folded%20in%20September%2C%20as,told%20the%20Energy%20UK%20conference on Thursday.

Get ‘EXTENSIVE SUPPORT.

Royal Dutch Shell (LON) has seen an increase in gas prices as a blessing for their business. This led to increased cash flow from electricity and gas prices.

Shell, which accounts for around 20% of the global demand for liquefied natural gases (LNG), is the largest seller. However, its sales have fallen in recent months due to production issues.

The company’s British power retail business has benefited https://www.reuters.com/business/energy/shells-uk-power-retailer-grow-by-25-after-rivals-default-2021-09-27 from the collapse of smaller rivals, picking up 255,000 new customers recently following a competitor’s default.

Britain’s Energy Intensive Users Group, which includes companies that make steel, cement, fertilizers, papers, and chemicals in Britain, has urged governments to implement emergency measures to ensure energy supplies remain uninterrupted and can be delivered at reasonable prices.

As gas prices hit record levels, forward power prices for Britain will be higher than last winter.

“The question is not only whether electricity and gas will be readily available; it’s also about the issue of pricing. EIUG suggested that the price of energy intensive industries may be priced out by the market on Thursday.

British Department for Business, Energy and Industrial Strategy, (BEIS) stated it was determined to provide “extensive support” for the energy-intensive industries and that they were “determined” to “secure a competitive tomorrow.”