In the hottest week of the year, it seems an oxymoron to talk about an energy emergency with the potential to engulf the UK this winter; but that’s what may well be on the cards.
“I feel sick writing this!”
Everyone will recall the warning MoneySaving Expert Martin Lewis put out in the spring, alerting the country to the impact on energy bills of the 54% rise in prices that came into effect in April. He predicted some – especially those reliant on low incomes, pensions or benefits – would struggle to cover the cost of that rise and predicted that worse could well be on the way if the autumn price adjustment was as bad.
Last week his worst fears were realised as the predictions for the likely increase in bills were released. The rise comes in two parts – a 64% (yes, that’s right – 64%) increase predicted in October, followed by a further rise the following January. You could almost hear the panic he was feeling as he broke the news of what this would mean for monthly payments;
Those numbers are presumably based on the Standard Variable Tariff, which many people chose to go on to when the price jump occurred in April. People were quick to point out that these increases were more than the £400 grant (rather than the loan of £400 which he originally planned for) former Chancellor Rishi Sunak was forced into giving people.
Heating a home could become unaffordable for many households.
Things could get a lot, lot worse
If you think that’s bad news, things could soon get a lot, lot worse. Twenty four hours after Lewis put out his warning, news came that NordStream 1, the pipeline that carries gas from Russia to Western Europe, was being taken down for routine maintenance. This maintenance period is due to last about two weeks and supplies should then resume. But there’s been a 60% cut in exports to Germany already and many in Europe now worry about Putin’s intentions as his war drags on.
What, the writer wondered, if Putin – already interrupting the supplies of grain from Ukraine to Africa and the Middle East – decides to strangle gas supplies in the way he is strangling food supply, as part of his war against the West? The obvious answer in such a scenario would see the price of gas go even higher. That’s begun to happen, according to Javier Blas Energy and Commodities reporter for Bloomberg, and is likely to stay high for a long time.
In such circumstances, you would expect governments to take action. That action should involve making sure reserves were fully stocked. That is indeed what is happening in the EU, where a recently passed law requires all member states to ensure their reserves were at least 80% full by November 1.
But what’s the British Government doing, now it’s no longer a member state? Remember, we were promised that leaving the EU would make us a global powerhouse, able to strike deals quickly without having to negotiate with the other countries, so we should have the whip hand.
Relying “on luck” to avoid the gas grid running dry
Like so many Brexit promises, it turns out to be a hollow boast, based on complacency. Currently our gas supplies come from a variety of sources, including just-in-time deliveries of liquefied natural gas, imported by tanker. We have minimal reserves, enough for a few days.
The one long-term storage facility we had was closed in 2017 by the Government who were unwilling to subsidise the maintenance costs. A substantial interruption to the supply of gas to Europe (which could be what Putin has in mind) would likely have a substantial impact here and could see gas supplies from Norway being redirected into the EU grid. However, we are happily exporting gas to other countries. Not for nothing did Charles Hendry MP state in 2017the UK was “dependent on luck to avoid a major emergency.”
A major emergency is now what’s looming, as Martin Lewis warns. What will people do when faced with unaffordable fuel bills? What will businesses, shops and schools dependent on gas do if their supplies are reduced or stopped? It isn’t fanciful to imagine the economy grinding to a halt as businesses shut down and it isn’t fanciful to suggest that if unemployment rises as a consequence and people have to choose between heating and eating, there won’t be civil unrest. Meanwhile, what’s the Government’s response? During the beauty contest it’s running to find a successor to Boris Johnson, no one seems to be talking about this at all.
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