Vital Trivia

What happens when commodities become scarce? The price increases. We have already seen highly publicised domestic gas and electricity price rises this year. Domestic heating oil has also increased dramatically though this price rise hasn’t had anywhere near the same media attention.

These prices rises were highlighted on the 29th Sept ’05 in a release from the DTI. Energy Statistics - Statistical Press Release

For the domestic sector:

And for the industrial sector:

These prices are for Quarter 2, comparing 2005 with 2004. The rise in heating oil is most significant, I do wonder how many people have put off buying their winter heating oil this summer faced with such a price rise on the year before. The industrial increases are dramatic, especially for gas. One major gas consuming industry is fertiliser manufacture, The Times recently reported that fertiliser production may soon be exported due to high gas prices:

Gas prices in Britain have now risen so high that Terra Nitrogen, one of Britain’s top chemicals companies, is thinking seriously about importing its ammonia products (that’s fertiliser to you and me) and selling them here rather than using its purpose-built, multi-million-pound plant in Billingham, near Middlesbrough, to make them.

The way gas prices have soared in the past few years is something of a national scandal, but one that continually fails to attract much attention, mainly because it affects unfashionable companies such as Terra, Ineos Chlor, another chemicals group, and Corus, the steelmaker.
Times Online

As shown in UK Energy Part 2: 2005 Quarter 2 Update UK indigenous extraction of oil, natural gas and coal is all in rapid decline. Electricity supply generated from nuclear power is also soon to enter rapid decline with 70% being decommissioned within nine years.

The UK faces prolonged high prices for energy with increasing probability of supply interruptions, the impact of which will chiefly be felt by industry.

Recognising the susceptibility of industry to likely energy supply interruption Sir Digby Jones, the Director-General of the CBI, said in the Sunday Times this week: “If we have a cold winter, we are going to throw the switch; businesses will shut down.” And Malcolm Wicks, the Energy Minister, who in my opinion has recently been hopelessly optimistic said: “It’s not about switching off the domestic customers but there could be problems for industry.”
http://www.timesonline.co.uk/article/0,,2-1819000,00.html

There are two points here, the physical shortage and the damage this shortage could do to the already struggling UK economy.

This post was written by Chris Vernon

This entry was posted on Friday, October 14th, 2005 at 10:21 pm and is filed under Hydrocarbon Depletion, Economy, Electricity. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.