Wholesale gas prices hit new all-time highs on Wednesday, prompting warnings that factories could be forced to shut down over winter or switch to more polluting fuels just as the UK hosts the Cop26 climate conference next month.
The crisis has already forced a wave of collapses among energy suppliers that has led to warnings of “desperate choices” for households likely to face higher bills as a result.
As power-hungry sectors such as steel, glass and chemicals fight their own battle with soaring gas and electricity costs, they warned of further shocks to both industry and consumers, including higher prices of goods and factories being forced to temporarily close.
Growing concern about the domino effect of high energy prices came as the cost of gas for delivery the next day reached 350p per therm on Wednesday, while gas for delivery in November reached 407p, both new records. Prices fell back later, after Russia’s president, Vladimir Putin, indicated that the country, the largest supplier of gas into Europe, was prepared to help ease the crisis.
But leading figures from energy-intensive industries said serious ramifications were already on the cards unless the government heeded their call for measures to reduce energy costs.
Trade body UK Steel said it was now “uneconomic” to make steel at certain times in the UK, with British firms facing double the electricity prices paid by rivals in Germany, France and the Netherlands. British Steel, based in Scunthorpe, has begun adding surcharges of up to £30 a tonne to its products to recoup higher energy costs, increasing costs for customers in the construction and automotive sectors.
David Bailey, a professor of business economics at Birmingham Business School, said consumers could end up feeling the pinch if steel remained expensive. “They’ll pass it on to consumers ultimately, so it could increase the price of cars,” he said.