UK gas prices hit a seven-year high while Brent oil soared to an all-time peak of $53 a barrel yesterday as production problems and the unusually cold weather combined to drive up energy markets.
The sharp rise in the price of gas, which hit 170p a therm at one stage in the day, was put down to panic buying by traders and growing concerns about falling North Sea output. Brent also rose on supply concerns, although these related more to the cold snap in the United States and refinery shutdowns there. The increase in wholesale gas prices fed through into electricity prices, affecting large industrial users. The impact on domestic consumers will take longer to feed through.
There were reports of problems at BP's Bruce complex and Conoco-Philips T-Block in the North Sea but Total said that production from its Eglin-Franklin field had returned to normal after an eight-hour shutdown on Wednesday.
Gas imports into the UK from mainland Europe through the Zeebrugge interconnector have also fallen over the past week due to tight supply and high demand on the Continent.
The fresh spike in gas prices came as politicians, regulators and industry leaders met in London to press home the need for speedier liberalisation of Europe's energy markets.
Andris Pieblags, the new European Energy Commissioner, told a seminar organised by the UK regulator Ofgem that, in addition to the EU-wide inquiry into gas and electricity markets announced last week, Brussels would take 11 EU member states to court in May unless they had implemented two directives aimed at opening up the gas and electricity markets. Among the countries facing possible court action are German, Spain, Sweden, Belgium and Greece.
Mike O'Brien, the UK's energy minister, said Britain would use its EU presidency to demand speedier action from states lagging behind in opening their markets.
Sir Roy Gardner, the chief executive of Centrica, warned that "major distortions" in the wider EU market were feeding back into the UK and moves such as the merger in Germany between E.ON and Ruhrgas had put back the cause of liberalisation further. "Put simply, the pace of liberalisation is too slow and too patchy. Without significant and sustained action we're unlikely to see the benefits of competition across Europe until well into the next decade," he added.
He said existing directives needed to be enforced, monopolies over distribution networks by dominant suppliers needed to be tackled, bottlenecks in cross-border transportation should be resolved and there must be third party access to gas storage.
Sir John Mogg, Ofgem's chairman, said the Continental markets remained a "major worry and risks undermining the benefits of domestic competition to British consumers".Reuse content