UK Gas Prices Hit Highest Level Since 2022 as Storage Covers Just 12 Days

Wholesale gas prices in Britain have climbed to their highest level since 2022, raising the prospect of further increases in household and business energy bills as the country heads into winter with some of the thinnest storage reserves in Europe.

Prices have more than doubled since the start of the year and were approaching 200p a therm on 9 September, a level last reached in December 2022, as the conflict in the Middle East disrupted shipments of liquefied natural gas (LNG) from Qatar.

Thin reserves

Britain's storage sites hold enough gas to meet only about 12 days of average winter demand. Germany and France, by contrast, keep enough in reserve to last three to four months.

The UK's largest storage facility, Rough, operated by Centrica in the North Sea off the East Yorkshire coast, faces possible permanent closure unless it receives government support.

The wider European picture offers little comfort. Storage across the continent was about 67% full in early September, against a seasonal norm of around 83%, which means British buyers face stiff competition for LNG cargoes as neighbouring countries race to rebuild their stocks before the heating season.

Britain relies heavily on seaborne LNG to top up supplies from the North Sea and Norway, leaving it especially exposed when global shipments tighten.

Simon Cran-McGreehin of the Energy and Climate Intelligence Unit said the conflict was pulling Britain back into the "ominous territory of wholesale gas prices last seen in 2022".

What it means for bills

Households already face their highest winter energy costs in three years. The government is removing the 5% VAT charged on domestic energy bills from October, but a 4% rise in the energy price cap at the same time will largely cancel out the saving. Bills are expected to rise again in January if wholesale prices stay high.

Businesses, which are not protected by the price cap, are also feeling the strain. The Food and Drink Federation has warned that rising energy and regulatory costs could push food price inflation to 6.4% by July 2027, adding to pressure on family budgets.

How ministers are responding

The government is considering extending the £150 Warm Home Discount to more households and is preparing to approve new North Sea gas production, including the Jackdaw field off Aberdeen.

However, new domestic output offers little immediate protection for consumers. UK producers sell their gas at prevailing international prices, so extra North Sea supply does not directly lower what households and businesses pay.

What happens next

The direction of prices over the winter will depend largely on the course of the Middle East conflict, the pace at which Qatari LNG shipments resume and the weather across Europe. A prolonged cold spell would put Britain's limited storage under particular strain.

The debate over the future of Rough is likely to sharpen as a result. Supporters of keeping the site open argue that greater storage capacity would cushion the country against price spikes, while ministers must weigh the cost of subsidising it against other demands on public money.

Image: Hugh Venables via Wikimedia Commons, CC BY-SA 2.0