U.K. Freight Train Firm Turns to Diesel as Electricity Soars

(Bloomberg) -- A U.K. rail freight operator said it’s turning back to diesel-operated trains because electricity costs have gotten too expensive, another small example of the wide-ranging effects of the global energy crisis.

Unprecedented electricity prices forced Freightliner to make the temporary move “to maintain a cost-effective option for transporting vital goods and supplies across the U.K.” the unit of Genesee and Wyoming Inc., said in a statement.

The U.K. is in the grip of an energy crisis that’s also hurting economies across Europe and Asia. Gas is trading at the equivalent of almost $200 in barrel terms in the U.K., driving a 268% surge in power prices this year. By contrast, Europe’s benchmark diesel price appears cheap, reaching a three-year high of $98 a barrel.

The soaring natural gas price has fueled expectations that industries and power companies will look toward alternative fuels. Most oil analysts are expecting about 500,000 barrels a day of additional demand for crude and refined fuels globally, although some are saying the spillover effect could be significantly larger.

Most of Freightliner’s services that were previously electrically hauled have already been temporarily switched to diesel.  Some of the Anglo-Scottish flows remain electrically-hauled for the time-being, but the company is working to switch those to diesel too. 

Of the company’s “active” fleet of 162 locomotives, 23 are electric, Freightliner said.

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