Posted by

Todd Holden, Greater Manchester Chamber of Commerce

20 Nov 2012

A new seasonal event has just occurred proving autumn is really with us.  It originates in part from Europe and it’s as predictable as leaves falling off the trees if not a lot less welcome.  Alas, I’m not talking about the Oktoberfest; it’s the annual above inflation gas price hike.  As tradition dictates it starts off with one company, who hit the headlines, only to be quickly followed up by most of the rest under cover of the headline.  It reminds me of team cycling where each person takes the lead – hard when you’re there, but you get to benefit from spending most of your time in the pack where the profile is lower and easier. 

A new tactic this year is for the gas companies to blame government environment policies, this is completely disingenuous. For every £1 it cost gas companies to implement Government policies to reduce household bills, there is a £29 increase in price from importing gas.

Gas has doubled in price from 2004 to 2012, and I clearly remember being told back in 2010 that by 2015 gas prices will have doubled again in 5 years.  More worryingly I was told very recently; by someone of equal knowledge that it was almost impossible to predict where future gas prices would be within a factor of 2! 

Some would have us believe shale gas is the answer; in the US it has seen prices tumble, to around 20% of the price we are paying Gazprom; but it’s very unlikely these prices will make their way across the Atlantic any time soon, if ever.  We are at least a decade away from commercialisation of shale gas in the UK, we have a skills, capability and infrastructure shortfall and the costs will be higher than the US.  With a combination of increased prices, security of supply and environmental concerns, this is a complex subject. Thankfully there is an easy answer; because the cheapest therm of gas is the one you never buy, it has no environmental impact and its security is guaranteed.  We need to address the cause not the symptom.