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Last Updated: Monday, 13 March 2006, 18:28 GMT
Gas shortage sends prices soaring
Gas pipes
The UK now imports much of its gas via Europe
UK natural gas prices hit a new record on Monday, as supply troubles forced National Grid to issue an alert asking industrial users to curb their usage.

The wholesale price of gas deliverable today quadrupled to as much as 255 pence a therm due to supply fears.

Gas supplies are tight at the moment because the country's main storage facility is shut and the recent cold snap has seen domestic usage soar.

If they get worse, industrial users could see their supplies shut off.

National Grid manages the UK gas pipeline network, and issued the "gas balancing alert" for the first time on Monday morning.

The warning is set to trigger if forecast demand for gas rises above 380 million cubic meters on a particular day.

No alternative

The alert is published on its website and is designed to encourage buyers and suppliers of gas to react.

Many intensive users cut back on production when prices surge, selling their gas back into the market.

Gas pipes
Business is responsible for two-thirds of UK gas consumption

According to the Energy Intensive Users Group, many of its members have already had to alter their production schedules this winter because of high gas prices.

For example, building materials group Hanson cut back brick production and fertilizer company Terra Nitrogen suspended some of its UK manufacturing, spokesman Jeremy Nicholson said.

"Some intensive users have back-up gas supplies or can move to alternative fuels like oil to operate their boilers or furnaces," he added.

"But some companies, many of them from the chemical industry, rely on gas as a raw material, and they have no alternative."

Declining supplies of natural gas from the North Sea have pushed wholesale gas prices higher in recent years and have reinforced the need for more investment in gas production and storage.

It has also meant that the UK has had to import more supplies, either through shipments of liquefied natural gas (LNG) or via pipelines or "interconnectors" to continental Europe or the Norwegian gas fields.

Consumer groups are hoping there will not be further price increases

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