Industry calls for help amid record gas prices

Industry leaders have called on government to help keep businesses and industries running as wholesale gas prices hit record highs.

The UK's gas benchmark traded as high as 400p a therm on Wednesday after rising 37% on Tuesday's market close.

The trading price was 60p a therm at the start of the year.

The high price of wholesale gas has put a number of UK energy firms out of business in the past few weeks and halted production across industries.

High demand for gas and reduced supply are behind a surge in wholesale prices.

The Energy Intensive Users Group, which represents steel, chemical and fertiliser firms, said surging costs had already resulted in steel production halting "at times of peak demand".

Last month, US-owned CF Industries shut two UK sites that produce 60% of the country's commercial carbon dioxide supplies because of the rise in gas prices, before the government stepped in to meet its operating costs for its Teeside plant for three weeks.

The shortage of carbon dioxide - a by-product of the fertiliser factories - led to warnings from food producers and supermarkets of shortages in the supply of fresh produce. The gas is to stun animals for slaughter and in packaging to prolong shelf life.

"We have already seen the impact of the truly astronomical increases in energy costs on production in the fertiliser and steel sectors," said Richard Leese, chairman of the Energy Intensive Users Group.

"Nobody wants to see a repeat in other industries this winter, given that UK EIIs [energy intensive industries] produce so many essential domestic and industrial products and are intrinsically linked with many supply chains."

The government has been contacted for comment.

Besides industry struggles, a total of nine energy suppliers have collapsed in recent weeks, which has affected nearly 1.73 million customers in September alone.

The companies that have gone bust have been mostly smaller firms, which have been unable to deliver price promises to customers because of the surge in gas prices.

Affected customers have been told they will be switched to a new tariff by energy regulator Ofgem and be contacted by their new supplier.

It has advised people to take a meter reading and to wait until a new supplier has been appointed before looking to switch to another energy firm.

Jonathan Brearley, the boss of Ofgem, has warned that the cost of protecting customers from failing energy providers could lead to higher bills.

Costs are also expected to increase when the higher energy price cap takes effect, with those on standard tariffs, with typical household levels of energy use, seeing bills go up by £139 to £1,277 a year.

Customers are protected from sudden hikes in gas prices through the energy price cap, which is the maximum price they can be charged on a standard tariff.