Let’s face it, there’s simply not enough oil and gas to go around

We have reached ‘peak oil’, and fuel prices look certain to rise for the foreseeable future

…You ask: “Why is gas tied to the price of oil, when the two are separate markets?” The price of oil is linked to gas in a number of ways. Many industries can switch from gas to oil and back at the flick of a switch, which is essential for the cheapest “interruptible” gas supply contracts. Gas and oil are discovered and exploited together and decline together – UK oil extraction peaked in 1999, gas peaked in 2000.

UK oil exports have collapsed to zero in eight years, helping to push up global oil prices. At the same time we have started to import gas, just as international competition takes off. That same international competition is driving up coal prices too.


Britain is, as you say, “a country that still sources 70% of its gas at home”. But that figure is declining at an accelerating rate, now falling 10% per year, and by 2020 80% of our domestic gas production will be gone (government and industry agree on this).

While there may be enough pipes and terminals in place for imports, it is very unlikely that there will be enough gas at affordable prices to fill them all. Of the 25 countries in the EU, 23 are gas importers; so competition will be fierce, and gas prices will rise for the foreseeable future.

Guardian