Ministers reject gas shortage fears

Wednesday, 23 November 2005 12:00 AM

The government today sought to fend off fears that rising gas prices and shortages would lead to an energy crisis this winter.

Prices of gas on the spot market - the equivalent of the stock market for heavy users of gas - today reached a record £1.65 a therm, causing a number of manufacturing and chemical plants to warn that they would have to shut down temporarily.

But trade and industry secretary Alan Johnson today insisted that domestic users would not be affected by the recent surge in gas prices, telling a select committee that only 0.2 per cent of all firms using gas, and just 0.05 per cent of all British companies, would be affected.

Later, in the Commons, energy minister Malcolm Wicks said that far from there being a shortage due to declining North Sea supplies, the national grid was "awash with gas".

Amid accusations that the government's energy policy was failing, Tony Blair also made clear during prime minister's questions that it was "utterly absurd" to suggest the government intervened in the liberalised gas market to either buy in gas supplies from abroad or cut prices.

He said the government was doing its "level best" to work within industry to ensure there was enough gas to meet demand, but said rising prices were "not something government on its own can resolve".

During emergency questions afterwards, Mr Wicks sought to reassure MPs that there was no shortage of gas, and said that reports from the national grid this morning suggested that what was happening with spot prices was "irrational".

Under pressure from the Conservatives about the action his department had taken to fend off the problem, he reiterated Mr Blair's point that intervening in the deregulated energy market was more the role of a "Stalinist minister for power" than the British government.

And Mr Wicks warned against trying to "talk up a crisis", saying that "the more we have of loose and totally inaccurate talk, the worse this will become".

However, shadow trade and industry secretary Bernard Jenkin said the lack of security of UK gas supplies reflected "the failure of eight years of UK energy policy" - something he said the Conservatives had long been calling on ministers to address.

"Along with the splits and disputes going on in [other parts of government], this just underlines the chaos of the government's energy policy," he declared.

On Monday, the CBI warned that the government had failed to provide a "coherent and integrated" energy policy, and must urgently take some "tough decisions" on how to meet Britain's future energy needs.

A review on whether or not to replace Britain's aged nuclear power stations is expected to be announced shortly, and, under questioning by MPs yesterday, Mr Blair hinted that he was personally in favour of a move towards nuclear energy.

"None of us in politics deliberately courts unpopularity but at some point you have to make a decision. There are real issues about climate change and now energy security and supply that will mean issues that are bound to be controversial," he said.

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