Ed Miliband has made Britain ever more reliant on Trump's America

Yahoo

31-03-2025

As the days get longer and British summertime begins, many households will be hoping for a reprieve from punishing winter energy bills.
Despite the Ofgem energy price cap rising 6pc to £1,849 per year for a typical household on Tuesday, some may have hoped the rise would be temporary – with warmer weather normally meaning prices would fall again from July.
Yet now those forecasts look under strain, as threats from global energy markets roil Britain's energy sector.
According to analysts, the UK could be facing an unusual summertime surge in energy prices, as plummeting North Sea gas production combines with a surge in global competition for US gas imports.
A new forecast from ICIS (Independent Commodity Intelligence Services) has warned of global gas shortages through the summer – potentially meaning higher prices.
It suggests the UK remains a long way from fulfilling Energy Secretary Ed Miliband's pre-election pledge to cut an average £300 from domestic energy bills.
And the ICIS warning also highlights how rapidly the UK is becoming reliant on imports, importing two-thirds of its needs last year – a far cry from two decades ago when North Sea supplies made the nation self-sufficient.
'Europe is heading into a pivotal summer 2025 for gas storage, with growing reliance on spot liquefied natural gas (LNG), particularly from the US … with March imports nearing record levels,' said an ICIS spokesperson.
Spot LNG refers to cargoes bought for delivery within 90 days – as opposed to gas sold through long-term contracts.
Prices for spot LNG are more volatile – and ICIS predicts that Europe's need to fill up stores depleted by a cold winter, plus surging demand from Asia, is going to drive up prices.
The UK's reliance on spot LNG to fuel its energy needs is likely to further tip the balance of power towards America, an LNG superpower.
Nearly half of the UK's imports came from Norway as piped gas, but the remaining 19bn cubic metres arrived as LNG – about 12bn cubic metres of this came from America in 2023.
That growing reliance on the US increasingly exposes the UK to the volatility not just of global markets, but also of Donald Trump's trade and tariff policies. The risk of leaning on Trump's America will be on full display this week when 'Liberation Day' rolls around on April 2. This is when Trump has promised to put reciprocal tariffs on a all global imports in a radical stepping up of his trade war. British officials are losing hope of securing exemptions.
The UK is not alone. Across western Europe and Asia, many more countries are adopting American LNG as a favoured fuel – a trend so rapid that LNG now accounts for 10pc to 15pc of all the gas consumed worldwide.
That trend is also enriching America. Last week, the US Energy Information Administration published new data showing the US exported 123bn cubic metres of gas as LNG last year – more than any other country.
How did the UK, where successive governments have prided themselves on leading the world in cutting emissions, make itself so dependent on such a volatile, expensive and polluting fuel?
The UK's growing reliance on LNG can be traced back to February 1959 when British Gas, then in public ownership, had a US cargo ship adapted to become the world's first LNG tanker.
Renamed the Methane Pioneer, it brought the world's first seaborne cargo of LNG from Louisiana to the British Gas Council's Canvey Island Terminal – showing that large quantities of LNG could be transported safely across the oceans.
LNG has become a dominant fuel source owing to its efficiency for global transportation.
LNG technologies cool methane or natural gas to extremely low temperatures of -162C. This turns the gas into a liquid with a six hundredth of the volume of natural gas.
Once delivered, the LNG is 'regasified' and injected into the natural gas transmission network for distribution to consumers.
Since the Methane Pioneer's first voyage, LNG trade has grown on average at 11pc per year. In 1971, about 2.6m metric tonnes were traded, but by 2023 the figure was to 410m metric tonnes.
That is growing fast. Shikha Chaturvedi, from investment bank JP Morgan, said global LNG supply capacity will increase by 54pc between now and 2030.
Companies like Shell are investing billions of pounds on the back of such predictions. Last week, chief executive Wael Sawan, said that LNG would be key to the company's future – and that it was amassing the largest LNG capacity among its peers, including one of the world's largest LNG tanker fleets, about 10pc of global capacity.
Sawan says that shift to LNG will also be good for the environment – cutting carbon emissions by replacing dirtier fuels, especially coal. Such claims are, however, rejected by the UK's own oil and gas producers.
Offshore Energies UK (OEUK), the trade body for North Sea oil and gas operators, which counts Shell as a member – but whose views on LNG differ radically from Sawan's – has warned the shift to LNG means more pollution and bigger bills for consumers.
OEUK also says that American LNG is also far more polluting than any other source of gas, with a carbon footprint 10 times greater than gas imported from Norway.
Some also say LNG is a far worse polluter even than coal.
'LNG leaves a greenhouse gas footprint that is 33pc worse than coal, when processing and shipping are taken into account,' concluded a study by Professor Robert Howarth of Cornell University last October.
The reason is that methane has a global warming impact 80 times greater than CO2 – and during its production, compression, transport and gasification some of it always escapes.
So how did successive UK governments, who have all supported the 2008 Climate Change Act and its target of net zero by 2050, come to embrace such a polluting and expensive foreign fuel?
The scale of UK dependence on gas is staggering. The UK consumes 65bn to 70bn cubic metres of gas a year or 1,100 cubic metres per person, equivalent to the volume of 14 double decker buses.
About a third is used in the 25m domestic boilers that heat our homes. A similar amount goes for electricity generation with the rest used by business and industry.
But our own supplies are falling, due to a mix of natural decline plus punitive taxes and political decisions that have sent North Sea investors fleeing. About 180 of the UK's 280 remaining gas and oil fields will shut by 2030.
The Climate Change Committee's balanced pathway to net zero assumes UK consumption will fall to 56bn cubic metres in 2030.
Right now the UK is lagging on those targets, but even if we catch up, the UK will still be consuming about 20bn cubic metres in the net zero target year of 2050. Data from the North Sea Transition Authority suggests 19bn cubic metres will have to be imported.
For a gas dependent Britain, it means the country will be reliant on LNG for decades to come – and competing on a global market where demand is surging.
Seb Kennedy, editor of the highly-regarded Energy Flux newsletter covering LNG trading, warns that the UK's growing import reliance means a bonanza lasting decades for traders – and escalating bills for consumers.
'LNG accounts for between 20pc and 40pc of UK natural gas demand, depending on market conditions. Rapid decline in North Sea production is exacerbating the UK's structural reliance on LNG to make up the shortfall.
'Traders always benefit no matter the market conditions and consumers are almost always on the losing end of the trade.'
For households praying for a break from high energy bills, that's a factor of the global energy markets they might have to get used to.
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