BRITAIN could face higher food bills, power shortages and soaring energy bills as the crisis in Ukraine deepens.
The country is a key supplier of wheat and disruptions to shipments from the capital Kiev have already sent prices soaring by around four per cent, affecting UK food costs.
Samuel Tombs, economist at Capital Economics, warned: “The UK is dependent on food imports so any increase in commodity prices will feed through to us.
“There is definitely a chance consumers could be affected by the crisis.”
On the energy front, a vital pipeline which supplies gas from Russia to Europe, including the UK, runs straight through Ukraine.
Russia’s state gas producer Gazprom last night warned Ukraine that it may increase the gas price it charges Kiev, which could have a knock-on effect.
Andrei Kruglov, Gazprom’s chief financial officer, said: “The situation with payments is worrying. Ukraine is paying but not as well as we would like it to.
“We are still thinking about whether to extend the pricing contract into the next quarter based on current prices.” Although the UK relies mainly on gas from Norway and the Middle East, any block in the supply from Russia would have a massive impact, by triggering price spikes.
Gas-fuelled power stations are vital for maintaining the UK’s electricity supplies, and if the crisis causes shortages it could lead to power cuts too.
Chris Faulkner, chief of US oil and gas exploration and production company Breitling Energy, said:
“Because the Ukraine is the gas hub for all of the EU any unrest there could affect the natural gas supply coming in through Russia. The effects of a major conflict there will surely reverberate throughout Europe, both at home and in the markets.”
Mark Todd, director of EnergyHelpLine said similar situations have led to spikes in gas prices and rising energy costs.
Panic He said the threat of a shortage prompts companies to “panic buy” gas further pushing up prices and deepening the problem.
He said: “These things can lead to wholesale price spikes, we have seen this in the past, particularly when there have been things going on in the Gulf.
“A massive amount of Europe’s gas comes from Russia, it is the biggest supplier to the continent, and although we get supplies from elsewhere is still one of our biggest.
“If there is a real meltdown in Ukraine and that leads to problems getting gas from Russia we could be facing a serious issue.
“The other problem is the markets.
Companies panic buy gas and traders take advantage. If for some reason the gas stops flowing there could be shortages and price rises.” Oil prices have also surged by around two per cent to more than $104 a barrel. RAC head of external affairs Pete Williams said: “The tensions in Ukraine will unfortunately affect everyone driving a vehicle in the UK as the fuel market is intrinsically linked to major international political events.”
AA spokesman Luke Bosdet said: “The two dollars a barrel rise in today’s Brent oil price represents a possible 1p rise in the pump price of petrol, but only if sustained.”
Article Author: Nathan Rao