As the row between Russia and Ukraine intensifies and the gas gets switched off, what does it mean for U.K. consumers?

The good news, in terms of supply, is that the spat between Russian and its former Soviet satellite Ukraine, will not mean shortages for UK customers. The bad news is that the cold snap and some increased demand from Europe, has raised wholesale prices which dashes hopes of a quick credit crunch price drop.

The U.K. only gets around 2% of its gas from Russia, unlike many mainland countries which are dependent on their large Eastern neighbour to keep the taps open.

With Ukraine as the hub of many of the supply pipelines to countries like Greece, Turkey, Italy and France, then shortages are inevitable as the supplies are switched off. Russia claims that Ukraine is stealing gas meant for elsewhere and so has to stop all gas being routed through that country. Ukraine denies this, but did admit to one news source that it had tapped off some gas for ‘technical reasons.’

The great thing for the U.K. is that most of its gas is sourced from the North Sea which, although now getting less, still accounts for a fifth of its supplies, with the rest coming from mainly Norway through a purpose built pipeline.

The cold snap was one of the main factors between the recent hike in the same-day delivery price of gas to around 73p a therm from around 61p.

Some U.K. gas has been switched back into mainland Europe in order to help the Russian situation, an action which again has prevented a fall in the gas price. And there has been some technical stoppages at British gas producers in the last few weeks, although these are understood to have been quickly rectified.

But there is better news on the horizon, with hopes that the gas price will soon tumble and follow the way of the oil price. Some say this has been flagged by the decision from Scottish Power to introduce a fixed price gas tariff, which offers a 10% discount to the standard price.

Good news, although consumer groups fear that any worsening in the East European situation, although both parties are meant to be in quite advanced talks to resolve the crisis, will mean that the gas price won’t yet receive the credit crunch dividend. British producers, looking across at their struggling mainland European neighbours, won’t be able to resist picking up better prices for selling gas over there, as well as here.

Guest Article by Neil Camp