Home Somerset business Prospects for small energy companies are “bleak” amid rising gas prices

Prospects for small energy companies are “bleak” amid rising gas prices

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The government wants energy companies to “stay afloat organically,” a cabinet minister said, as the growing energy crisis has led business leaders to declare the outlook “bleak.”

Wholesale gas prices have jumped 250% since January – with an increase of 70% since August alone, leading to calls for support from the industry.

Business Secretary Kwasi Kwarteng is holding a new round of crisis talks with the energy sector on Monday, fearing more small suppliers could end up on the wall.

However, as industry executives say more needs to be done, Foreign Secretary James Cleverly has not confirmed what action could be taken.

Mr Kwarteng previously said consumers would be protected from sudden price hikes thanks to the government‘s energy price cap. However, this puts pressure on suppliers – especially small businesses – who are unable to pass increases in wholesale gas prices on to their customers.

Four businesses have already closed and there are fears more could follow.

Some analysts have reportedly predicted that UK energy companies could be downsized to three-quarters over the next few months, leaving just 10.

On Monday, Peter McGirr, managing director of small energy company Green, said “the outlook is bleak.”

Mr McGirr told the BBC’s Today show: ‘It’s not that I have a bad business model or that I have a bad company.

“We just don’t have such deep pockets to keep going through this crisis. I think all the vendors are feeling the pinch, but some of them just have much deeper pockets to try to weather the storm. “

He said: “I think without any support mechanism put in place by the government it is unlikely that we will live through the winter.”

But Mr Cleverly said he “was not going to speculate” about government intervention.

Urged on whether he therefore ruled out the government from bailing out companies, he added: “We are looking at a range of options.”

But he said the government wants energy companies to “stay afloat organically.”

Speaking to BBC Breakfast, he said: “Businesses should ideally stay afloat through their own efforts. What we want to make sure is that we protect the integrity of our supply, we protect consumers, both commercial and residential, and we will discuss with industry how best to do this. “

The rise in gas prices has been blamed on a number of factors, including a cold winter that depleted stocks, strong demand for liquefied natural gas from Asia and reduced supplies from Russia.

Mr Cleverly said the shortage was due to the pandemic and told Good Morning Britain: ‘Because the global economy is sort of waking up from this pause imposed on us by Covid, we are suddenly seeing an increase in demand and therefore soaring gas prices has affected all kinds of sectors of the economy, it has impacted food production and we are looking to make sure that we protect these food suppliers. “

However, Emma Pinchbeck, director of Energy UK, a trade association in the energy sector, told Times Radio that the problem cannot be blamed on just one factor.



Emma Pinchbeck, Executive Director of Renewable UK

Speaking to broadcasters on the tarmac at New York’s JFK Airport overnight, Prime Minister Boris Johnson said: “I think people should be reassured that yes, there are a lot of issues at hand. short term not only in our country, the UK, but around the world due to gas supplies and shortages of all kinds.

“It’s really a function of the wake-up call of the global economy after Covid.

“We have to try to fix it as fast as possible, make sure we have the supplies we want, make sure we don’t allow the businesses we rely on to go bankrupt. We will have to do everything we can.

“But that will improve as the market begins to recover, as the global economy recovers.”

At the same time, ministers are grappling with warnings of potential shortages on the shelves as the ripple effect of rising gas prices trickles down to the economy.

Producers have warned that supplies of meat, poultry and soft drinks could all be affected due to a shortage of carbon dioxide (CO2).

It follows the shutdown of two large fertilizer factories in Teesside and Cheshire – which produce CO2 as a by-product – with owners citing rising gas prices.

Nick Allen, chief executive of the British Meat Processors Association, said the country could be two weeks away from the disappearance of British meat from supermarket shelves.

Mr Allen told Sky News meat makers said they had between five and 15 days of supply left.

Mr Cleverly said: “We will continue to work with the sector to ensure there is food on the table and gas in the pipes and this will remain a priority for the government.”

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