UK Braces for Worse as War in Ukraine Exacerbates Growing Oil and Gas Price Crises

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In North Manchester, England, Bernie’s Fish & Chips owner Charlie Fleming is apologizing to customers.

Due to the rising prices of oil and gas increasing the cost of fish and potatoes (boats and trucks use oil), gas for the fryers and much more, Fleming recently had to inform regulars that the family-owned business was having to raise prices to stay afloat.

“The past few weeks we have been explaining to the customers about the current situation and most of them are understanding and willing to pay the extra, however we do feel guilty by charging extra,” Flemings told Top Class Actions. “But there is nothing we can do.”

Bernie’s Fish & Chips is not alone. The small business is one of thousands across the country having to either raise prices, or shutter due to the ongoing energy crisis in the UK.  

Small businesses have been facing higher bills for months as the global wholesale gas price hit unprecedented levels, and petrol supplies became strained. 

Consumers are also bracing for their gas bills to spike on April 1, when the energy price cap – the legal maximum price suppliers can charge households — is raised.

On top of all this, the gas and oil crisis has only been made worse by the war in Ukraine.

Energy Bills Set to Soar

A perfect storm of events squeezing energy supplies pushed the price of gas up to unprecedented levels on the global market last year.

Causes include a cold European winter in 2020/21 reducing supplies, a windless summer in 2021, and increased demand from China. 

The UK has been hard-hit because about 85% of homes have gas heating, and gas generates a third of the country’s electricity.

Consumers have been protected from the brunt of the crisis by the energy price cap.

But bills will rise by £700 to about £2,000 per year in April when the cap is increased. They are expected to reach about £3,000 when the cap is increased again this autumn.

War in Ukraine Driving Gas Prices Higher

Meanwhile, wholesale prices rose higher following the invasion of Ukraine by Russia—the world’s largest natural gas exporter—amid fears over supply shortages. 

Although the UK gets only about 5% of its gas from Russia directly, if Vladimir Putin were to constrict supplies to Europe, it would drive up wholesale prices worldwide, including in the UK, experts say.

Spokesperson for the British Retail Consortium Tom Holder told Top Class Actions that higher prices for oil and gas, as well as rises in National Insurance and energy price caps, are going to squeeze households even more in the coming months, leaving consumers with less spending money.

“Meanwhile retailers continue to face increased energy, transport and labour costs, all of which are being exacerbated by the situation in Ukraine.”

What About Oil?

UK petrol and diesel prices have also soared this year, with unleaded petrol at 165.40 pence per liter — the equivalent of about $8 USD per gallon — on March 16.

Russian imports account for 8% of total UK oil demand.

In the past week, the United States, Canada and the United Kingdom have announced embargoes or phase-out measures for Russian energy in the wake of the invasion of Ukraine.

Energy policy research analyst Ben McWilliams told the BBC it should be easier to find alternative suppliers for oil than for gas, because while some oil comes from Russia, it’s easy enough to get it from other sources. 

Alternatives to using Russian gas will be more difficult, because of the big pipe infrastructure we have that takes Russian gas to Europe, McWilliams said. 

What’s Next for UK Energy Policy?

If Europe plans to stop importing oil and gas from Russia, we will have to ration our use in the short term, McWilliams said.

“Part of the conversation now is, can we tell households to turn their thermostats down one degree, which can save a significant chunk of gas.”

While renewables are part of the picture, they take a long time to roll out, so other energy sources are not a short term solution to the crisis.

And something needs to be done to help small businesses and consumers right now. 

Recently, the British government announced up to £350 in support to help mitigate rocketing prices for consumers.

Meanwhile, in the fish and chip industry alone, experts estimate one-third of the nation’s fish and chip businesses could go under in a matter of months. 

Fleming said he was doing everything in his power to stay afloat, including turning on the pans a few minutes later each day to try and keep gas bills down.

“No matter where you are, please support your local fish and chip shop before it’s too late.”

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