BRITAIN reportedly has just two days’ worth of natural gas left in storage, sparking fears of a potential energy crunch as supplies from the Middle East run dry.
New figures from transmission operator National Gas show the UK’s reserves have plunged from 18,000 GWh last year to just 6,700 GWh – enough to cover just 1.5 days of demand.
A similar volume is currently held in tanks as liquefied natural gas.
In comparison, other European countries have built up reserves lasting several weeks and are better prepared to weather fluctuations in supply.
The supply squeeze has pushed traders to charge Britain a premium for gas, taking advantage of the country’s need to outbid competitors abroad.
As a result, the UK is now paying the highest wholesale gas prices in Europe.
It comes as Britain effectively operates hand-to-mouth, depending on a steady stream of tankers carrying American liquefied natural gas (LNG), along with pipeline gas from Norway, to keep the lights on and homes heated.
The UK used to have up to 12 days worth of gas in storage, but the system collapsed after successive government ministers pulled its funding.
National Gas data showed that gas stores were at 18 per cent of their former capacity on Friday, while LNG stores were just over half full.
A National Gas spokesman said the UK gets most of its gas from Norway and its own North Sea, reports The Telegraph.
The spokesman told the outlet: “The UK benefits from a wide range of gas supply sources. These provide the flexibility needed to balance supply and demand.”
But a report sent to ministers by National Gas warned about the growing shortage of storage as production in the North Sea begins to fall sharply.
In the report, National Gas chief executive Jon Butterworth warned Energy Secretary Ed Miliband that keeping Britain’s lights on would require either three new gas storage sites or six massive barges capable of processing LNG and feeding the gas into the UK network.
Mr Butterworth said ministers must “recognise the critical role gas continues to play in maintaining a stable and reliable energy system – particularly during periods of cold weather and low renewable generation”.
He added: “Declining North Sea production and recent changes in global energy markets are increasing Britain’s reliance on imports and tightening supply margins in the coming years.
“At the same time, a more turbulent geopolitical landscape and the increasing frequency of extreme weather events are introducing new risks to our energy security.”
Meanwhile, fears of a significant spike in oil prices are also growing, driven largely by disruption to the flow through the Strait of Hormuz.
Iran’s Revolutionary Guard vowed to “set ablaze” any Western tanker attempting to sail through the strait – and hundreds have since amassed at either end.
Goldman Sachs warned that the current drop in the Middle East’s oil output is 17 times larger than the peak drop in Russia‘s output after it invaded Ukraine.
The bank said: “We now think that oil prices would likely exceed $100 next week if no signs of solutions emerge by then,” the bank said.
“We now also think it’s likely that oil prices, especially for refined products, would exceed the 2008 and 2022 peaks, if Strait of Hormuz flows were to remain depressed throughout March.”
It comes as Kemi Badenoch warned of gas storage shortages during her speech at the Conservative Party conference.
She said: “The UK only has enough gas storage to last for eight days. Mark my words, a price shock is coming.
“And when it does, it won’t just hit our pockets. It will have a huge impact on Britain’s borrowing costs too.”
Meanwhile, Prof Mohamed El-Erian of the University of Pennsylvania warned that households across the UK will be “hit from multiple sides” by price rises caused by the escalating conflict in the Middle East.
He told BBC Radio 4’s Today programme: “Once again, we see the UK more vulnerable to external shocks than otherwise that in turn is going to translate into higher mortgage rates.
“So the average person will get hit from multiple sides, unfortunately.”
“The average person is going to face higher energy prices, but also higher mortgage rates and slowly but surely, noticeable increases in a broad range of goods and services because of supply chain disruptions.”
