Economic forecasts often come with risks, which I find very safe. A fertilizer company that has just stopped production at two UK plants is not the last business to do so.
In the coming months, we will have more industrial plants Temporarily stop Manufacture.
Why? This is because high energy users often do so when energy prices are high and current energy prices are very high.
Currently, UK natural gas prices are around £ 162 per therm.
Looking at this, it was about £ 100 per therm in late August.
For most of the last decade, it has been close to £ 40 per therm.
Not only is gasoline prices at unprecedented levels, but they are rising surprisingly rapidly. Over the past year, they have increased by about 455%.
There are many reasons why energy prices are high.
Russia seems to have curtailed supply in recent months.
Many gas platforms in the North Sea were closed due to regular maintenance work postponed during COVID-19.
European gas reserves are unusually low at this time of the year.
Next, add the fact that the wind speed is a little slower than usual in September of this year. This means that the UK can’t rely too much on wind turbines for electricity, so it has to rely on gas-fired power plants.
The last straw occurred earlier this week when one of the two electrical interconnect cables that power the UK from France was damaged by a fire and failed. Until spring..
All in all, it’s no wonder that energy prices, whether gas or electricity, are very high at this point.
In reality, it may take some time for these costs to be reflected to domestic customers. Most energy providers fix wholesale costs long ago, but some price increases can prove unsustainable.
However, users of industrial energy tend to be sensitive to these price fluctuations, and many users have already discontinued or reduced production.
And given the complexity of today’s complex supply chains, such closures can often have unpredictable consequences.
One such consequence of the closure of those fertilizer plants is the sudden shortage of carbon dioxide gas-a by-product of those processes.
The result is problems in the poultry and livestock sectors that use CO2 during slaughter.
It may sound strange, but the very realistic consequences are that high gas prices can cause chain reactions and cause mass slaughter of thousands of animals.
What is worrisome is that this is just the beginning of autumn and winter, characterized by gas shortages and high energy prices, which can cause turmoil in many parts of the UK economy.
What’s Behind the Energy Crisis-And Why It’s Hurting British Industry | Business News
Source link What’s Behind the Energy Crisis-And Why It’s Hurting British Industry | Business News