Popular channelsQuick advice on...RSS feeds30 second guides...Company searchUseful linksThis is Money deals
About this siteThis is Money is proud to be approved by the Plain English Campaign
BRITAIN is facing a future of winter power cuts and soaring electricity bills as supplies of North Sea gas dwindle.
OTHER STORIES
FTSE LATEST
LATEST ON...
A round-up of the financial crisis
Scientists warn that after long years of reaping the benefits of North Sea gas, we will have to depend on Russia and unstable Middle East countries for supplies of natural gas by 2020.
And a report published last week by the Royal Academy of Engineering claimed that even as early as 2004 a severe winter would trigger power blackouts because our gas reserves are too small.
One of its authors, Ian Fells, Professor of energy conservation at Newcastle University, accused the Government of underestimating the problem facing the UK.
He said: 'A few years ago there was no worry - it was simply a matter of turning up gas production in the North Sea. That luxury soon will not be open to us.'
The British gas industry was designed to meet the requirements of a severe winter every 20 years and so maintained tiny gas reserves. In contrast, Germany and France keep 20% of their gas in reserve. Since 1950, we have switched away from coal to become dependent on gas. Nearly 80% of our electricity is gas-generated.
The report forecasts that by 2020 the Government will have to spend £13 billion on new gas storage facilities as the country relies increasingly on imports.
The first sign that alarm bells are ringing in Whitehall was the presence of Energy Minister Brian Wilson in Norway last week for talks about Anglo-Norwegian cooperation on further development in the North Sea.
Wilson said: 'Britain will soon become a major gas importer, and Norway is an obvious partner in this. That heightens the urgency of ensuring that the proper infrastructure is in place.' He is already considering plans to bail out nuclear power station operator British Energy. It generates a quarter of the country's electricity but it has been crippled by falling wholesale prices.
Coal has been ruled out as an alternative energy source. Experts say the cost of 'cleaning' coal to make it environmentally acceptable would render it uneconomic.
Economist Richard Douthwaite said: 'Natural gas was always the easy option, not dirty coal or dangerous nuclear power - hence the dash for gas. Now it is running out and there are no easy options left'.
The Energy Review submitted to Tony Blair in February warned that by 2005 Britain will be a net importer of gas, adding tens of millions of pounds to our import bill, and by 2020 we will have to import about 90% of our gas.
Apart from the peril of blackouts, Britain's transformation from gas exporter to importer will also tear a hole in our balance of payments.
Earnings from the export of fuels other than oil, of which gas takes the lion's share, are already on the slide. In the first quarter of 2000, the UK had a positive balance of £124 million. That had plunged to £59 million in the first quarter of this year. Meanwhile, imports soared from £172 million to £234 million.
The Government's worries centre on the fact that the world's three biggest gas-supplying regions are Russia, North Africa and the Middle East. The September 11 attacks have further heightened fears about the security of supply.
Fells said: 'Britain is on the most westerly point of Europe, and all the pipelines coming to us go through countries that are our competitors for energy supplies.'
There are fears that Russia, while a reliable trading nation at present, might not always be as stable. And the Middle East has always been seen as a potential problem area sensitive to wars and terrorist attacks.
Fells disagrees strongly with Government claims that since there are vast reserves of gas available around the world, prices for consumers would not have to rise once the UK becomes a gas importer.
'Of course gas prices will rise,' he insists. 'It is just a matter of when, and by how much.'
• OIL prices, already skittish over the threat of a US attack on Iraq, were made more volatile last week by fears that oil exporter Nigeria may default on paying interest on some of its £28 billion foreign debt.
Production cuts ordered by Opec have hit Nigeria hard. Now it may pump more oil to boost overseas earnings and meet its debt commitments, sending prices gyrating again.
They have swung between $18.69 and $27.58 a barrel this year.
LATEST NEWS AND SHARE DATA FOR COMPANIES IN THIS REPORT
Do your own research to find thebest savings accounts
OUR TOP VIDEOS
Do you want to save £200 for nothing?
Yes:
No:
Are you paying too much for your internet?
Enter your post code:
