Following Russia’s announcement that it will not reopen its main gas pipeline to Europe, gas prices have skyrocketed due to worries about energy supplies.
The benchmark Dutch wholesale gas price for the month ahead increased by as much as 26% on Monday before easing down slightly.
After being closed for three days, the Nord Stream 1 pipeline was supposed to return on Saturday.
However, Gazprom, a state-owned energy company in Russia, claimed to have discovered a leak.
Because of the war in Ukraine, Europe has accused Russia of using gas supplies as extortion. Moscow disputes this accusation.
The last few weeks have seen a lot of volatility in wholesale prices. When Germany revealed that its gas storage facilities were filling up more quickly than anticipated, they plummeted dramatically last week.
Although the UK is not reliant on Nord Stream 1 for its gas, the Kremlin’s move to limit supply to Europe has increased the cost of wholesale gas overall.
This is what caused the price cap on energy bills to increase for consumers in Scotland, Wales, and England.
If Liz Truss is elected prime minister, she will present a strategy to address excessive energy costs. She is a candidate for the Tory leadership. Her challenger Rishi Sunak has stated he will target further payments intended for the poorest.
However, UK businesses are not covered by a price cap, and last week, the British Chambers of Commerce warned that enterprises might “shut their doors this winter” if they were not supported with skyrocketing costs.
The “crunch moment” will occur later in the year if demand for gas is very high and will surpass what can be imported, according to energy analyst Bill Farren-Price, who spoke on the BBC’s Today program.
The new prime minister’s primary priority, he continued, would be to take action on rising energy prices.
Several European governments have made efforts to assist consumers and businesses in coping with rising energy costs. Germany launched a €65 billion (£56.2 billion) package on Sunday that includes one-time payments to the most disadvantaged and tax reductions for businesses that use a lot of energy.
Over the weekend, Sweden and Finland also disclosed multibillion-pound measures to aid energy industries.
G7’s cap of gas prices
Moscow has denied using energy supplies as a financial weapon against Western nations that support Ukraine.
It claims that the sanctions are to blame for the delay in Nord Stream 1’s routine maintenance, while the European Union disputes this.
On Friday, shortly after the G7 countries decided to set a price restriction on Russian oil in support of Ukraine, Gazprom made the announcement.
Read Also: G7 plans to put a cap on Russian oil prices
With the adoption of a price cap, nations that agree to the policy will only be allowed to buy Russian oil and petroleum products shipped by sea that are offered below the price cap.
Russia, however, claims that it would not export to nations who adhere to the restriction.
Up to 170 million cubic meters of gas can be transported daily over the Nord Stream 1 pipeline, which runs from the Russian coast near St. Petersburg to north-eastern Germany.
It is owned by Nord Stream AG, whose principal shareholder is Gazprom.
The pipeline has been shut down multiple times since Russia invaded Ukraine.
In July, Gazprom entirely cut off supply for ten days, citing “a maintenance break.” Ten days later, it restarted, albeit at a considerably lower level.
