Cheap energy in further doubt as Russia-Ukraine dispute worsens - 05/01/2009

The dispute between Russia and Ukraine has worsened, casting further doubt over the future of cheap energy in the UK, reports financialadvice.co.uk.

Russia recently cut off the gas supply to Ukraine as the result of a longstanding dispute over unpaid bills, but Ukraine has now been accused of stealing energy intended for other European countries. Ukraine is a major junction for power piped from Russian energy suppliers to countries throughout Europe, and Russia is under pressure to ensure that no other countries suffer reductions in their supply.

Energy suppliers in the UK increased their prices a number of times during 2008 in response to soaring wholesale costs but have been under pressure for weeks to pass on price cuts arising from lower winter costs. These reductions are due by the spring, but problems with supplies piped through Ukraine could delay access to cheap energy.

Efforts are being made to broker an agreement between Russia and Ukraine, but it seems a deal will not be immediately forthcoming.

Mark Todd, of energyhelpline.com, said: "This could mean those price cuts are delayed if we see a spike in gas prices. It all depends on whether Ukraine is going to dip into supplies bound for western Europe."

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