Brits will be paying dearly to heat their homes this winter, a fact that will increase scrutiny on the country’s domestic energy policies. Heating bills are already something of a political football—the opposition Labour party has an ill-conceived populist pander plan to freeze energy prices if elected in 2015. But supply disruptions in Norway, one of the UK’s biggest sources for natural gas, promise to make the UK especially vulnerable to rising gas prices in the coming months. The BBC reports:
Norway’s biggest gas field Troll, which accounts for around 35 percent of its gas production, has had its capacity reduced for much of this year, and its operator says supplies will be limited until 2014….Britain already relies heavily on Norwegian imports to meet its needs and analysts say this dependency is set to rise as Russian gas will mainly go to continental Europe, while shipments of overseas liquefied natural gas (LNG) will mostly head to Asia, where customers pay more for gas.
Norwegian gas generally trades cheaper than Russian supplies, and if the UK wants to start importing Russian gas it will have to pay a premium that many countries in continental Europe already decry as too expensive. Britain’s other options won’t be much cheaper; Asia is paying high prices for LNG, pushing up the price the UK will have to pay.This headache is yet another reason for Britain to aggressively pursue its own shale gas resources. Local protests have stalled exploratory well drilling, but rising gas bills might be enough to sway the NIMBY activists who have so staunchly opposed taking advantage of this domestic energy source. Britain won’t be able to extract enough shale gas to offset price spikes this winter, but getting that ball rolling now will boost the country’s energy security and lower its heating bills in the years to come.
[Oil rig image courtesy of Shutterstock]