Blair denies shortage of gas, but says difficulties exist over rising prices

Blair denies shortage of gas, but says difficulties exist over rising prices

	Published : Thu, 24 Nov 2005 17:05 By : Andrew Stead Print this Story

LONDON: British prime minister Tony Blair said the country did not face any shortage of gas but he admitted there are "difficulties" over soaring prices.

The wholesale price of gas has gone up almost 500 per cent over the three weeks to 1.7 pound a therm. This has resulted in production cuts by some of the power stations and bulk users of gas have been told to cut down on consumption or even close their units.

The concern over shortage of gas supply has become grimmer with the meteorological office alerting about the prospects of a coldest winter in a decade.

Experts are of the opinion that with the shortage and spiralling prices, average utility bills will be in the range of 85 pounds a year in about a month's time.

Blair told the parliament that there are difficulties about gas prices and the impending colder winter this year. There is a problem for high level industry users but not for domestic consumers. However, there is no way the government could guarantee the prices in an international market.

The prime minister told the industry to source more gas from the Continent and pointed out that the "interconnector" pipeline with the Netherlands is running at a little over half-capacity.

Conservatives led by Michael Howard described the government's failure to guarantee gas supplies as another example of its "incompetence". He said the Chamber of Business and Industry and other organisations have been warning for months of possible gas shortages. "Why has the Government ignored them for so long? On flu vaccines and gas supplies, the Government has proved thoroughly incompetent."

Subsequently, energy minister Malcolm Wicks, in a statement, said he had held meetings with the oil and gas industry representatives and there is no cause for worry. He accused the Tories of scare mongering.

When asked by a former labour minister Paddy Tipping whether he can confirm that even with the severest of winter, gas supplies to domestic consumers will continue, Wicks said the domestic customer is not threatened at all. "The facts are that so far this winter there have been no gas shortages and supply and demand have remained in balance."

Wicks later claimed that demand for gas has been met by deliveries from the North Sea and the rest of the U.K. continental shelf, the interconnector, imports through the Isle of Grain and from storage.

Meanwhile, at least seven out of the U.K.'s 20 gas-fired power stations are understood to have stopped production of electricity to save money.

Several business groups have come out with warnings that in the event of a severe winter, many manufacturing units will be forced to shut down and there could be situations like three-days weeks of the early 1970s.

Earlier, secretary of state for trade and industry Alan Johnson had told a parliamentary committee that the country will face problems only in case of a "one-in-50" winter. Even then, domestic consumers will be spared.