Do you recall back a decade when the conversation was about whether fracking would make a difference to gas prices or not? And the general consensus among those against fracking was that whatever the amount we actually found in green and pleasant GB that wouldn’t make any difference to the price?
The whole of Europe’s interlinked system is abnormally short of gas. It is the result of cold weather earlier in the spring; rocketing demand for liquefied natural gas (LNG) in Asia; and a surge in EU carbon prices to €52 a tonne, driving a coal-to-gas switch in power plants.
Putin has seized his moment. Gazprom is working to rule, supplying minimal contractual volumes. It has stopped bidding for extra capacity through the Ukraine pipeline (bar a trivial amount), and pointedly failed to bid for any extra flows through the Polish pipeline for the rest of the year. In short, it has cut off the supplementary flows necessary for seasonal rebuilding.
Being subject to a monopoly supplier doesn’t sound so good now, does it?
European gas prices have spiralled to a 13-year high of $10 per million BTU (British thermal units). They could go much higher if there is a panic scramble for supplies when the first frost arrives.
Wholesale gas prices in the UK reached a record 93.22 pence per therm in early July.
Fracking was going to come online about about one third to one half that.
So, err, fracking was going to make a difference to UK gas prices then. Perhaps we should revisit that decision?