A potential rush for gas supplies could cause UK energy bills to rise later in year according to the Power Insights analysis from LCP Delta.
Since Russia’s invasion of Ukraine affected pipeline supplies of natural gas, Europe has had to rely more on its storage capacity and liquefied natural gas (LNG) imports to get it through the winter. The UK does not have substantial gas storage of its own, so it relies upon European stockpiles. With European gas stocks being at a high level in spring due to a mild winter, energy prices have come down recently and helped lower inflation in the UK, which stood on the Bank of England’s target of 2% on June 20th.
The head of economics, policy and investment at LCP Delta, Sam Hollister, said in a report that there are concerning indications that prices may increase again in the autumn. European storage levels are currently at a relatively high 73%, but he said there are concerns among traders about heat waves, the remaining flow of gas from Russia, and unanticipated outages, adding:
“If storage levels aren’t replenished now, we could see a dash for gas later this year as we hit prime heating season. This could result in an even bigger leap in the January energy price cap.”
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