Back in the days when British North Sea natural gas reserves were at full throttle Britain use to be self sufficient for natural gas. In those days only a couple of factors had major influence in UK gas prices, they were weather and demand, the golden days as many energy brokers referred it. Nowadays the UK gas and energy market has grown more complex with several factors influencing prices on a daily basis.
In 1998 the first gas pipeline between UK and continental Europe was opened which automatically hooked British gas prices to European oil indexed prices. That was when British prices started to be influenced by marginal factors.
This is how it works. When crude oil prices raise so does natural gas prices for continental Europe and consequently the UK, because of pipeline connections to Europe. Since UK gas prices aren’t completely hooked up to European oil indexed gas prices, gas in the UK becomes cheaper than in continental Europe and European gas traders end up buying gas from the UK. That is when the demand in increased and UK gas suppliers put their prices up to stop the flow to continental Europe and to contain the price surge in the UK gas market.
One factor that recently started to play an important role in the British gas and energy market was LNG imports. Liquefied Natural Gas imports brought a global component to business and commercial gas prices. Predictions are that in a few years time the UK will be importing as much as 50% of its total gas supply needs from LNG which will make UK gas prices compete with American and Asian markets.
The biggest issue with LNG imports is where to store it. Britain is lacking LNG import terminals but the issue is being addressed with two new large terminals under construction in Wales and the expansion of the Isle of Grain should increase UK’s LNG storage capacity considerably.
Commercial and business gas prices continue to be influenced by weather and demand but as afore mentioned not as much as it use to. Proof to that is what happened the past winter, when temperatures were way below seasonal average pushing gas for heating consumption to extremely high levels and instead of going up wholesale gas prices dropped.
As if energy brokers didn’t have enough to worry about, two new factors are concerning energy brokers across the land. It first started with the turmoil in Egypt that extended to Libya which made crude oil prices surge over the $120 US Dollar mark, causing a rally in the UK gas market. As a consequence UK gas prices climbed to its highest levels in more than 21 months.
The second factor that is taking away the sleep of UK energy brokers is the earthquake and tsunami that devastated part of the eastern coast of Japan. You may ask why? The answer is simple, Japan is the biggest LNG importer and a reduction in its nuclear energy generation increases the likelihood of LNG tankers being diverted from the UK to Japan, as the second biggest Japanese energy generation resource is gas power plants.
As you can see the UK Energy and Gas Market are more complex than what many people think. Now imagine you having to watch all those factors in order to find the cheapest business gas and business energy prices for you company. You wouldn’t have time to focus on what really matters for your business. That is why when it comes down to finding the best deals in gas or energy it’s best to leave it to the professionals: Energy Brokers.

