Prices at these levels are already hitting business users hard, especially energy intensive industries that tend to be more directly exposed to changes in wholesale energy prices, and the risk of economic damage is high.
The UK and other European governments are urgently reviewing their energy policy in order to ensure supplies keep flowing – something that will be much harder to achieve if dependence on Russian oil and gas is to be reduced.
The flexibility of the international markets to respond is limited, and there is not much more OPEC countries can do to increase oil supplies.
The UK government is therefore looking at how North Sea production could be increased and is expected to make announcements shortly on accelerating the roll out of renewables like wind and solar, new initiatives to improve energy efficiency, and continuing investment in low carbon nuclear for the longer term.
Recent events have strengthened the case for reducing dependence on fossil fuels, so it is no surprise that UK and European governments remain committed to their long-term objective of achieving Net Zero emissions by around 2050. But the route by which we get there may have to be altered, at least in the immediate future, if our energy supplies are to remain secure.
As John Hall, Chairman of Alfa Energy Group, stated in a recent podcast hosted by Corporate Affairs Officer, Jeremy Nicholson: “In the shorter term, we are going to have to look at whatever we can to keep the lights on and keep industry running.”
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