Gas Prices Increase, Fuel Poverty Down?
Well what do you know, gas prices are up again. The BBC report:
22% rise from British Gas (about 55% of market)
14.7% rise from EDF (London Energy, Seeboard and SWEB)
15% rise from Scottish Power (UK’s 5th largest supplier)
This of course shouldn’t come as a surprise to anyone reading this but there are a few points I would like to make.
The BBC coverage is still in my opinion failing to report the reason behind the increase choosing to talk about continental energy firms holding back gas supplies and general anti-competitive behaviour. This is just the result of poor policy decisions by the UK and other EU members quite rightly placing security of supply as their highest priority. Their actions may well result holding back supplies but it isn’t anti-competitive behaviour, it’s making sure you can meet domestic demand before exporting such a vital resource.
The reason why we are experiencing such price rises is instead due to North Sea depletion with gas extraction rates falling since 2000 and Governments failure to respond to this decline by either building more storage capacity or taking action to reduce demand in line with North Sea declines. Failure on these two points has left us at the mercy of the market (predominantly occupied by players who care more about keeping the lights than selling the vital resource) and the high prices we are seeing today.
A quick recap of the North Sea’s recent performance:
Total gas production in million cubic metres (link)
2000 114,557 mcm
2001 112,567 mcm -1.7
2002 109,816 mcm -2.4%
2003 108,088 mcm -1.6%
2004 100,966 mcm -6.6%
There is no strategy from Government to address this, well maybe there is a strategy but it isn’t a very good one. The energy consultation in January states: “By 2020 we are likely to be importing around three quarters of our primary energy” without evaluating the wider global energy environment over that timeframe. This raises three points of concern:
- How much will this imported energy cost?
- How secure will these supplies be?
- Will the energy even be available for import?
If the current trade deficit, the prices we are paying now and the disruptions seen across Europe this winter are anything to go by the answers to those questions are not going to be what we want to hear when planning to import 80-90% of our gas within 14 years.
These recent announcements also underline the lunacy of the Governments expected reductions in the number of people living in fuel poverty presented here: Fuel Poverty
“An extra 200,000 older people are pushed into fuel poverty when a 10% increase occurs, so this particular price rise will have a wide effect on vulnerable pensioners,” said Mervyn Kohler, a spokesman for Help the Aged.
This post was written by Chris Vernon
This entry was posted on Friday, February 17th, 2006 at 7:01 pm and is filed under Hydrocarbon Depletion, Economy, Politics. 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.
February 17th, 2006 at 10:52 pm
I’m staggered by the number of people who aren’t even astonished by these issues.
Than you for helping bring these issues into the Zeitgeist: if we can float the ideas & continually edit between enough of us, eventually people will pick up the a version of the message they understand
Its so hard finding a way to make anybody care: everyone seems to believe that ’somewhere somebody will take care of this for us’.
Its almost evangelistic.
February 18th, 2006 at 10:16 am
[…] e who are interested in Energy prices, without explaining why these things are happening. Chris Vernon has a great report on the continuing upward march of Gas prices in the UK. He’s right […]
February 21st, 2006 at 1:01 am
This was predictable at the time of the White Paper. The only thing that has happened since is the installation of a tiny amount of wind energy, and the extension of the life of some of the nuclear power stations (which is distinctly dodgy and was lipped in very quietly without debate).
There is a Whitehall Joint COmmittee on security of energy supplies. What on earth can they do but discuss the matter and produce reports ?
The Continental suppliers and the International owners of power stations don’t care, we will have to pay any price.
February 21st, 2006 at 7:05 am
Interesting you mention JESS. They are meant:
To monitor at a strategic level, over a timescale of at least seven years ahead:
a) The availability of supplies of gas;
b) The availability of supplies of electricity and fuels used for electricity generation;
c) The adequacy of generating capacity; and
d) The adequacy of the UK’s gas and electricity infrastructure;
They publish a two reports a year, one in the spring and one in the autumn looking forward over the coming winter. They didn’t publish their autumn 2005 report! When asked they said they had resource issues (one assumes they meant human resources rather than energy resources!) but I think the reason is that any analysis published last autumn with a 7 year timeline would have highlighted serious shortfalls, information they wanted to keep quiet.
July 27th, 2006 at 4:27 pm
The government won’t do anything - because that would involve extra taxes and long term investment and that would be unpopular and they won’t get re-elected.
The gas companies won’t do anything as they will always be able to sell gas whatever the price.
The only alternative is to stop using it (especially for electricity generation) and use some other source of power, but that will require a strategic investment in alternatives.
Perhaps it’s time to elect a ‘Green’ government who will invest in local, renewable, stable energy supplies?
We all need to look carefully at our power supplies - gas is going to rise and rise and rise in price. It’s only a matter of how much pain you can stand before you are forced to let go.