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Predicting Future Energy Prices – Part 2

By 10th May 2011February 15th, 2022No Comments

 

 

Posted by: David Powell

Gas Storage

Gas storage is very important to market stability as it allows surplus reserves to be released to the market in times of dwindling supply. However, the UK has very low storage levels (when compared to anywhere else that matters ‘energy-wise’).

The US and Europe (as a whole) have storage levels of 15-20%, while the UK’s is around 6%. Hence UK price is much more influenced by supply fluctuations. This is why, for example, recent technical issues in Norwegian gas fields and pipes have caused spikes in the UK’s energy market.

Some small storage increases are planned to be in place by the end of this year with further, much larger increases in 2015. The planned increases should help to stabilise prices in the UK. Although conversely, some experts predict that the closing gap between summer and winter energy prices will make increasing storage a less cost effective option and is increasingly likely to be dropped altogether. Inaction could be very costly as it’s predicted that unless UK gas storage grows considerably in next few years; prices could increase by up to 40% by 2015.