300 jobs at risk as CF Fertilisers stops production
A rise in gas prices has made their business 'inoperable'
Last updated 20th Sep 2021
The rise in gas prices has meant that CF Fertiliser has stopped production at their plant in Stockton, putting nearly 300 jobs at risk.
The firm sited that the stop in production was due to the rising cost of natural gases making their business 'inoperable'.
In addition to those working at the site thousands more people could be impacted who work in the supply chain.
Stockton North MP Alex Cunningham believes the situation in salvageable and is keen to find a solution quickly as the region can’t afford to lose another big business.
Mr Cunningham said: "I'm trying to arrange a meeting with the Secretary of State at the business department to talk about what we can do to aid this problem we have on Teeside now. The last thing we want to do is to lose a company like CF Fertilisers because it'll have a tremendous knock on effect."
The price of gas has soared in recent weeks, putting several energy suppliers out of business and forcing some factories to stop production.
Alex Cunningham is calling on the government to intervene, by reworking taxes around natural gases to help save a struggling Teesside business.
The Stockton MP said: "They've got to come up with a solution which gives us some of the same lower costs for energy in this country as other companies have in other countries. But we also need to address the gas transportation prices and the emissions charges."
CF Fertilisers also has a site in Cheshire and helps thousands of workers in a nationwide supply chain.
Why are wholesale gas prices rising?
The economy is opening up from its pandemic lows, so demand for gas is increasing. The price of wholesale gas has surged by 250% since the beginning of the year and added 70% just since August, according to figures from Oil & Gas UK.
With winter just around the corner, the demand of gas naturally rises, especially in countries such as the UK which overwhelmingly rely on gas to heat homes.
But a perfect storm of other problems has also hit the sector. Supply from Russia has dried up recently, and demand is high in Asia, which is putting pressure on international markets.
In the UK, several gas platforms in the North Sea have closed to perform maintenance that was paused during the pandemic.
In a further stroke of bad luck, cables that import electricity from France were damaged last week, and September has not been a very windy month, meaning less energy has been produced from wind turbines. These problems have meant that more gas is needed to produce electricity.
The energy suppliers expect the gas price to go up and down, and will often give themselves some headroom for rises.
But unprecedented recent price rises mean that a lot of customers are now paying suppliers less for energy than it costs the suppliers to buy that energy. Unsurprisingly this is not a viable business model.
What has the Governments response been?
The Government wants energy firms to "stay afloat organically", a Cabinet minister has said, as the growing energy crisis led to company bosses saying the outlook was "looking bleak".
Business Secretary Kwasi Kwarteng is holding a fresh round of crisis talks with the energy industry on Monday amid fears more small suppliers could go to the wall.
Mr Kwarteng previously said consumers would be protected from sudden price hikes through the Government's energy price cap.
However that puts pressure on the suppliers - particularly smaller companies - who are unable to pass on the increases in wholesale gas prices to their customers.
Have any suppliers gone bust yet?
So far five energy suppliers have gone out of business in recent weeks, with many small energy suppliers predicted to go under before the end of the year.
British Gas has agreed to take on an extra 350,000 domestic customers from collapsed energy firm People's Energy, regulator Ofgem has confirmed. The company went bust last week, leading to Ofgem finding another supplier to take on the firm's customers.
Outstanding credit balances including money owed to both existing and former domestic customers of People's Energy will also be honoured.
What should I do if my supplier goes bust?
If your energy supplier goes bust, Government regulator Ofgem will move you to a new supplier.
If this is to happen, make sure to take pictures of your meters, and download or print out your bills from the old supplier. If Ofgem moves you to a supplier or provides you with a deal you are not happy with, you can then shop around.
Additionally, if your energy supplier owes you money, your money is protected and you should get it back.
Other than this you will not have to do anything. Ofgem will automatically move you to a new supplier. This might take a few weeks, but your new supplier will contact you when it is sorted. You can continue to use your gas and electricity as before in the meanwhile.