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(Bloomberg) -- U.K. Business Secretary Kwasi Kwarteng called another round of emergency meetings with leaders of the natural gas industry, seeking to head off a crisis as suppliers face increasing pressure from an unprecedented surge in energy costs.
Kwarteng met with senior executives from energy companies and regulators Saturday to discuss the jump in gas prices that’s threatened to shut suppliers and disrupt industries from fertilizer to meat. Kwarteng will meet with the regulator, Ofgem, tomorrow and convene another meeting with executives on Monday to plan a way forward.
“I was reassured that security of supply was not a cause for immediate concern within the industry,” Kwarteng said in a statement.
Europe’s energy crisis has helped push natural gas prices to records in the U.K. The squeeze in natural gas supply and the jump in prices has forced at least five U.K. energy suppliers to shut. The executives assured Kwarteng that there was no threat to gas supplies as the country moves into the colder winter months.
“Ofgem has robust measures in place to ensure that customers do not need to worry, their needs are met, and their gas and electricity supply will continue uninterrupted if a supplier fails,” according to a government statement.
Read More: U.K. Energy Suppliers Go Out of Business As Prices Jump
Natural gas is crucial to power generation for homes and industry and for heating in winter, with more than 22 million households connected to the grid in 2020. Bills will go up for 11 million households from Oct. 1 and the rising bills will put upward pressure on inflation, which unexpectedly leaped above the Bank of England’s 2% target in the past few months.
Apart from hitting consumers, the higher prices and tight supply is having a knock-on effect across the economy, leading to two U.K. fertilizer plants halting output, and threatening shortages of carbon dioxide -- a byproduct of fertilizer production -- relied on by the food industry.
Carbon dioxide is used to stun animals for slaughter, in food packaging that boosts shelf life and in the ‘dry ice’ that keeps freezer items frozen during delivery. The British Meat Processors Association warned that CO2 supplies could run out within two weeks, forcing slaughterhouses to close just as pig producers are already facing the imminent prospect of culling animals.
Read More: Energy Crisis Brings Fresh Chaos for Battered U.K. Food Supplies
An unprecedented energy crunch in Europe has been brewing for years, with the continent growing increasingly dependent on intermittent sources of energy such as wind and solar while investments in fossil fuels declined. The uptick in global gas demand as economies bounce back from lockdown coupled with lower gas reserves after last year’s cold winter is also putting pressure on prices.
“Ofgem is working closely with government and industry to ensure consumers continue to be protected while global gas prices are high,” a spokesman for the U.K. regulator said.
The agriculture industry may also be hard hit. Earlier this week, CF Industries said it’s halting two U.K. plants due to soaring energy costs. Norwegian fertilizer maker Yara on Friday said that it will by next week have curtailed about 40% of its European ammonia output capacity as record-high gas prices hit production production.
Fertilizer prices jumped in the past year as a crop rally helped farmers boost purchases. They’ve been further supported after Hurricane Ida struck the heart of the U.S. fertilizer industry and Storm Nicholas threatened more damage in the Gulf of Mexico. Higher nutrient costs risk exacerbating global food inflation at a time when hunger is on the rise, particularly in poorer nations.
(Adds comment from regulator in 10th paragraph)
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