Pressure is mounting on the government to act over the near doubling of industrial gas prices during the past year as evidence emerged that UK manufacturing is beginning to sustain permanent damage.
The Chemical Industries Association told the Department of Trade and Industry last week that gas prices had risen by more than 80% over 1999 levels.
It has been revealed that high gas prices were a key factor in ICI’s decision this month to close its methanol plant at Billingham, Teesside. The plant consumes 200m therms of gas a year, and one prospective buyer said it was simply not viable if prices remain at current levels.
‘Clearly the hike from 14p to 21p a therm was the straw that broke the camel’s back,’ said John Stoney, managing director of ICI’s methanol business.
Soaring gas prices are also thought to be impeding the company’s attempts to sell its energy-intensive chlor-chemicals business. ‘This is an issue for us,’ conceded an insider.Steel giant Corus is thought to be considering future investments in The Netherlands rather than the UK because of the difference in gas prices.
‘The UK climate for energy-intensive business is dreadful,’ said a senior executive at another of the big energy consuming companies.
The CIA and other organisations in the Energy Intensive Users Group are due to meet industry regulator Ofgem and DTI officials at the end of the month to press for action. Ofgem is currently investigating allegations of market rigging by gas suppliers in the UK.