 | DrumBeat: August 1, 2008 | The Oil Drum | Peak Oil and the Financial Markets: A Forecast for 2008--July 31 Update |  |
67 comments on The European Gas Market
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67 comments on The European Gas Market
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The Free Market Old New Labour Style
With retail gas price rises of over 30% now on their way in the UK, my feeling is that the lower third of income groups will likely be insolvent with the combined effects of higher gas, electricity, fuel, food and mortgages.
Unemployment is rising and I think things are about to get a whole lot worse as public sector workers discover they can no longer afford to live let alone afford a holiday in Spain.
This is beginning to hit the news. And since the UK government follows and does not lead, we begin to get a sense of what the reactions might be to this crisis.
Winter fuel allowance
Its clear that the winter fuel allowance for pensioners will be increased. This will barely scratch the surface of the problem though.
The basic problem we have is demand in excess of supply and increasing the fuel allowance merely bolsters demand - the exact opposite of what needs to happen. UK government money will get transferred straight into the pockets of the Norwegians - that's ultra smart.
To be fair, Malcolm Wicks and Centrica's boss were both promoting fuel efficiency yesterday - just a decade too late. The UK government is guilty of dereliction of duty. When thousands of pensioners die from cold this winter those responsible should be lined up and held to account. I'd start with the idiots who in the past and who continue to provide ridiculous optimistic forecasts for UK oil and gas production.
Windfall taxes
The calls for more windfall taxes on the energy producers and utilities are already being made. Again, this would be the exact opposite of what is required. We need to maximise energy production and provide all incentives to companies engaged in that area.
So my message to the politicians - and those reporting this story in the MSM. Think supply and demand. Policies must do everything to promote supply and to reduce demand for energy.
Speed limits
Engine size
Insulation, insulation, insulation
Expansion of alternative energies
Politicians that got us into this terrible mess are unlikely to be able to solve the problem. Trouble is none of them seem to have a f*g clue.
Hi Euan,
Another great post clearly showing the problems we face, thank you. Why is this not so totally obvious to our so-called leaders and media?
Maybe Sarkozy knows this and that's why they are trying to include North Africa in the EU? and i thought it was just to get more Frech speakers.
We have just heard that the deal for a French company EDF to take over our nuclear power stations (existing sites that would be easiest to build new plants) has been blocked by two shareholders - Investec and Prudential. They obviously realise that coal and gas fired generation will become increasingly expensive over the next few years. Again this is yet another example of how bad the UK government is at managing finances since they sold off these shares last year for a quick cash fix when they were worth much less than today, just like the sales of gold and Westinghouse Electric Company (nuclear reactors). So whatever happens we are almost certainly faced with a lengthy delay in getting anything started:-(
I would agree with Euan in trying to drastically reduce demand and would also suggest as a first step that all "social" housing be heavily insulated at no cost to the occupants (this rented housing is generally occupied by the lowest section of income groups). To pay for this there should be an "efficiency tax" that only begins above a certain number of units.
One good note, i heard Spain is going to impose a 90kmh speed limit.
"Politicians that got us into this terrible mess are unlikely to be able to solve the problem. Trouble is none of them seem to have a f*g clue."
I know for a fact that some politicians do understand the issues but unfortunately we have the problem that us sheeple don't like hearing bad news and would be reluctant to vote for anybody who asks us to cut back - think Carter and his cardigan:-( I'm having enough trouble convincing my wife.
We must still keep pressing for better thinking from the politicians.
By the way what have you been doing with UK day ahead prices while I was on holiday? I'm away two weeks and the prices go mad:-)
I think we need also to invite Russia to join the EU. Day ahead gas is 54p / therm - up 15%.
I agree with insulating social housing - though I think there needs to be some element of cost to retain some link with individual responsibility. Problem is I suspect vast amounts of poor quality housing is likely beyond the pale. But if you hand out £200 / year for a decade, that's £2000 that could be spent on conserving energy as opposed to helping folks burn it.
Seriously, inviting Russia to EU is a great idea. Better do that now, otherwise it might be that in 10 years time Russia will be inviting EU to join the CIS (half-kidding).
After all EU made the compromise of adjoining Romania and Bulgaria, why not Russia too? No matter how much I love my home country (BG), it was and still is light years away from EU states and in many respects well behind Russia. I realize the distaste in EU with Putin's policies, but incorporating Russia may be the best way to keep him under check. The problem would be that Russia will be too big of a challenge for the EU political and financial resources, but IMO it would be worth it.
either that or Russia inviting europe into the Russian federation.
Boris
London
Great piece Euarn. Makes one go mmmm. When disaster strikes in the UK in the near future maybe other countries will wake up. That's the only possitive thing I can filter out.