Government calms fears of gas price crisisRussia-Ukraine gas dispute won't affect UK - yet

09 January 2009

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Energy secretary Ed Miliband has moved to reassure gas and electricity customers that the current gas dispute between Russia and Ukraine will not affect the supply of gas to the UK and lead to higher prices.

Russia supplies gas to Europe via pipelines that run through neighbouring Ukraine. The row is over Russian claims that Ukraine is siphoning off gas destined for Europe to replace the supplies lost when state-controlled gas company Gazprom turned off the tap last week in a dispute over unpaid bills and price increases.

So far seven EU countries - Austria, Greece, Hungary, Romania, the Czech Republic, Slovakia, Bulgaria - as well as Bosnia-Herzegovina, Croatia, Macedonia and Serbia, have reported a total stoppage of gas supplies from Russia.

Gas supplies

The UK is believed to be immune for now - according to the government, only 2% of the UK's gas supply comes from Russia and if that stopped, it could easily be topped up from other sources.

On BBC Radio 4’s Today programme, Mr Miliband said: 'We have a diverse range of sources where we get our gas from, which is the most important thing, I think, this dispute teaches us for all countries.

‘But what we want to avoid is the risk that prices might go up in Britain or might not go down as quickly as they should because this dispute drags on. That is why we need to get it resolved as quickly as possible.’

Energy price rises

Following record price rises in 2008, wholesale energy prices have fallen in recent months and Britain’s gas and electricity suppliers have hinted at price cuts for householders – earlier this week Scottish Power cut the cost of gas on one of its fixed-rate tariffs by 10%.

However, a prolonged dispute between Russia and Ukraine could put the prospect of lower bills in jeopardy. In the last few days the wholesale cost of gas has risen by 26% and this could feed through to household prices if the row drags on.

Which? principal economist John Holmes said: 'While we currently only get a small amount of our gas from Russia this dispute will have an impact on global wholesale gas prices and so has the potential to impact on the cost of energy to UK consumers.

‘The dispute highlights the dependency of our society on gas, how little heed we pay to how we use it, and the long-term question of whether adequate investment has been made to ensure the security of our energy supply in the long-term.'

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