Gas prices – whose reputation has been hit hardest?

Global energy prices started to rise in 2021, driven chiefly by a sharp increase in the price of natural gas. Europe felt this most acutely, a landmass that is heavily reliant on gas imports for both heat and electricity. The United Kingdom in particular was hit hard by Europe’s gas price crisis.

A range of stakeholders played roles in this crisis – the UK Government, Russia, energy providers and regulators – and all have seen their reputations impacted by negative sentiment, as seen in alva’s latest reporting.

Why is there a European gas price crisis?

European natural gas prices were pushed to unprecedented levels due to a worldwide squeeze on energy supplies. Wholesale prices rose even higher following the invasion of Ukraine by Russia, the world’s largest natural gas exporter. Set against the backdrop of supply chain woes and economic shocks brought on by the pandemic, the media’s annual coverage of energy prices was particularly prolific and negative during the winter of 2021.

Using stakeholder sentiment analysis, alva’s UK Gas Price Crisis Analysis assessed the reputational impact towards the main players in the saga since December 2021, helping to understand which groups are drawing the most negativity due to the crisis. alva looked at the impact on the UK Government, regulators, Russia, the energy industry, and a number of key utility companies.

The reputational blame game

The gas price conversation overall generated an alva score of -66, which is strongly negative on alva’s scale of -100 to 100. The effect on customers is the most impactful topic of conversation by some way, with an impact of -20 on the overall gas price discussion score. This follows reports in the UK media that wholesale gas and power prices will push families into fuel poverty, with the energy price cap set to increase in April.

Other impactful issues are those regarding increasing gas prices (-10), and businesses being at risk (-9). This came after energy providers Together Energy, Bulb and Orbit Energy went bust – and as expectations grew of a tough spring for the agriculture sector due to rising fertiliser prices.

Taking a chronological look across the period, the UK Government, energy industry, regulators and Russia have all seen their reputations trending to around -50 and below by mid-March. Other than the invasion of Ukraine, key milestones included Ofgem stepping in for the 25^th time in three months, and concerns of a “national crisis” from Energy UK and energy companies.

The share of blame is somewhat circular: regulators and the UK Government blamed energy companies for lacking resilience, while energy companies blamed regulators and the government for not doing enough to pre-empt the gas crisis and protect customers.

How has the UK Government’s reputation been affected?

The Government has faced widespread criticism from the media, energy companies, trade bodies, MPs and peers over the issue of gas prices. In December, the FT reported that a group of influential energy companies were increasing pressure on ministers to protect customers and suppliers from the volatile commodity markets.

alva discovered that sentiment towards the UK Government trended joint lowest for the period, with a sentiment score of -66, as Prime Minister Boris Johnson prepared to unveil an energy supply strategy to enhance the UK’s self-sufficiency away from Russian oil and gas.

Russia’s role in Europe’s energy crisis

The UK Government’s move to reduce Russian oil and gas imports is just one example of steps being taken globally to impose sanctions on Russia. In the Versailles declaration on 10 March, the EU member states agreed to phase out Europe’s dependency on Russian gas, oil and coal. Meanwhile, US President Joe Biden banned imports of Russian oil and gas into the US, as Washington stepped up economic sanctions on Moscow.

Many energy companies also cut ties with Russian energy giant Gazprom. Meanwhile, the bombardment of Ukraine has increased fears of additional disruption to supplies to Europe. Amid this global backdrop, Russia’s reputation score across the period plummeted to -66.

The role of energy providers in the European gas crisis

Looking at the energy providers, reputation is closely linked to treatment of customers. EDF generated a positive sentiment score of 58 due to discussion around its initiatives to assist vulnerable customers. The company also pressed ministers to pass on an estimated £180m value added tax windfall from higher electricity and gas bills to the most vulnerable households, claiming a cost-of-living crisis looms.

Meanwhile, BP’s reputation dropped to -64 at the end of the period, after chief executive Bernard Looney dismissed rising calls from opposition parties and green groups asking the government to impose a windfall tax on fossil fuel companies. However, BP’s score saw an upward movement after it cut ties with Gazprom. It remains to be seen if this was too little, too late for the company.

Conclusion

The reputational damage experienced by the key players in this saga – the UK Government, Russia, energy providers and regulators – has been extensive. Not only that, the impact of negative sentiment caused by the European gas price crisis appears to become more damaging as time wears on.

The few success stories in this debacle are those, like EDF, that listen to their stakeholders and act on those conversations. Can the other gas sector actors learn from this and build better relationships with their key stakeholder groups, to improve their reputation?

For an in-depth analysis of the reputational impact of the gas price crisis on the sector, see alva’s latest Reputation Intelligence Report, UK Gas Price Crisis Analysis.