Natural Gas in the UK, Part 1: Infrastructures & Geopolitics

The UK’s consumer energy regulator, the Office of Gas and Electricity Markets (Ofgem), announced on 6 August 2021 that it will increase the rates that energy companies can charge consumers for energy beginning 1 October. This increase comes on the heels of a rate increase that came into effect only half a year earlier, on 1 April, that pushed up household gas bills by an average of £90/year. It is estimated that the new increase will raise the cost for households by another £140-155/year for natural gas. In this blog post series, I examine the UK’s natural gas infrastructure, the market dynamics behind rising global natural gas prices, and who will be affected the most by Ofgem’s rate increase. I show how the deregulation and financialization of UK natural gas over the last couple of decades has exposed UK consumers to the geopolitics of natural gas pipelines and fluctuations in financial market prices for natural gas. I address natural gas taxes, environmental levies, and domestic energy suppliers in part two.