UK average day-ahead gas price rises 14% in 2013

The 2013 average was by far the highest in any of the years when the UK NBP spot gas market has been active, beating the averages for all the years from 1997 to 2012.

Back in 2003 the day-ahead price came to only 20.32 p/th.

The increase in gas in 2013 came in a year which saw a cold end to the first quarter running into a cold start to the second quarter, leaving gas stocks very low.

Strong injections into storage were required across the summer and into October to refill facilities ahead of the current winter, and with LNG availability fairly limited due to strong demand in Asia, the UK had to import lots of Continental pipeline gas across the year.

The record gas price comes amid much debate in the UK over the impact of energy costs on household bills.

Politicians are seeking to take some of the pressure off bills by removing the cost of some environmental measures and moving this into general taxation. Household energy bills include wholesale costs, network charges, taxation and environmental and social measures.

The weather in the fourth quarter of 2013 proved relatively mild, and on January 3, 2014, day-ahead gas was trading around 65-66 p/th, below the average 2013 price. If the first quarter remains mild, prices could continue to ease.

However traders remain wary due to the cold weather in 2013 lasting into April.