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The Impact of Freezing Temperatures on Energy Markets |
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Tuesday, 12 January 2010 00:00 |
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The current cold spell being experienced across the UK has had little impact on the energy markets, which still remain at a level very favourable to end-users. Although we’ve seen a small rise over the last few days, the overall prices are still holding at prices akin to Summer 2007.
Unsurprisingly, as temperatures have hit almost record-lows (below -20C in some places) demand for energy, particularly gas, has peaked as people have turned central heating up in an effort to keep warm. Fortunately, contrary to claims from some politicians and the media, UK gas is not likely to “run out within 8 days” as supply is currently plentiful - although National Grid has issued a warning that demand may outstrip supply as a matter of course. Britain’s biggest storage site, Rough, can alone supply nearly 10 percent of current demand levels and was still 70 percent full on Wednesday the 6th January 2010. This is enough fuel to run at full flow for 65 days, although the pipelines won’t necessarily allow this (hence the reason for the huge investment needed in the network, as reported in our May ‘09 newsletter - available to download using the links on the left of this page). Coupled with the storage around the rest of the country - it is reported we have more than enough gas to see us through this prolonged cold snap, with more deliveries being accepted every week.
Although the unusually cold weather has not had much of an impact on prices as yet, there’s no guarantee there won’t be panic buying on the markets which would increase prices and so it’s still our intention to take advantage of these low market prices for our clients and we will be looking to tie in contracts for client’s at the best prices available |
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