People in Britain may soon be seeing the benefits of a glut in global gas supplies, with average household bills falling despite a growing dependence on imported fuel.
The news of falling bills follows on from disastrous week for global stock markets in the energy sector. Brent Crude suffered its biggest financial slump in four years in London yesterday, testing the $80-a-barrel mark. This is more than a 30% fall this year, 15% of which has been in the last month.
While investors have been watching aghast as billions of pounds were lost to market gyrations, a fuel glut and a slowing global economy have driven the oil price down to a level that could save the world $1.8bn a day on everyday fuel costs.
As a result many countries are building facilities for exporting liquefied natural gas (LNG) and Britain has ample capacity to import it at terminals in Milford Haven, Pembrokeshire, and the Isle of Grain, Kent.
According to a report by UK Energy Research Centre claims that Britain is facing rising gas prices because of the decline in North Sea production are unfounded.
“By the early 2020s there might be an oversupply of LNG and in such circumstances the UK is well placed to attract increased supplies,”
The study also highlighted the risk that that Gazprom, the Russian state-owned gas company, could be forced to cut the cost of gas in Europe in response to competition from LNG, particularly from the US, which is converting import terminals to export some of its vast supplies of shale gas.
He said: “There is no reason to just have a scenario where gas prices go up. There is no shortage of gas [globally].”
Switching to burning more gas in power stations will help Britain meet its climate change targets because it has half the emissions of coal, the study found. However, its authors criticise the government for exaggerating the potential for shale gas in Britain.
Ministers have suggested that widespread fracking to extract shale gas could bring down energy prices, improve security of supplies and boost the economy in the northwest of England.
The report says: “Any talk of shale gas making the UK self-sufficient [in gas] again, let alone allowing significant exports, is far-fetched.”