Cost of living

[Spartacus]

The latest thinking from Scottish Power is that the government should loan them £100bn so that they can freeze energy bills now and the loan is repaid over the next 20 or so years through bills.

BBC News - Scottish Power's £100bn plan to freeze energy bills for two years

https://www.bbc.co.uk/news/uk-scotland-62645441

Let's think about this, saddling consumers now and in the future with a share of the £100bn debt for 20 plus years where there is no guarantees that in 2 years energy prices will be lower then they are today

A classic robbing Peter to pay Paul scenario.

At the same time, the big gas extraction companies will still see excessive profits from the current situation at our and our government backed loans expense.

This is not a solution but a case of locking us into fuel poverty for longer.

The solution needs to remove the emphasis on the gas extraction companies making a profit out of a crisis whilst allowing energy prices to return to a more sustainable level. Maybe even nationalising them again and controlling how much they sell gas for thus reducing the global race to the highest price as other companies will struggle to sell at higher prices.

In all things wholesale buyers look for best not worst price and if someone is offering a lower price they will gravitate towards it thus pulling other companies prices down.🤔

Might be a bit simplistic but somethings gotta give

[diable rouge]

Thoughts and possible solutions from a relevant think tank...

[Spartacus]

Thanks DR

Interesting reading, however it seems to miss part of the issue that the big oil and gas companies supplying the retail suppliers are profiteering on the rise in global prices, caused partly by demand as the economy reopened and partly by the war in Ukraine.

It talks about windfall taxes on them but that alone won't stop global wholesale prices rising. There needs to be some constructive thinking on how to globally, short term, reduce wholesale prices which then reflect in domestic and business bills. Long term the reliance on gas to produce energy obviously needs to be reduced.

Whilst I can arm chair speculate, I'm not in power (yet, Wha Ha Ha Ha 🧐) and globally governments seem to be tinkering around the edges and not tackling the real problem, high wholesale prices spured on by oil and gas companies taking advantage of the situation.

[diable rouge]

As much as I don't like multi-nationals and the huge profits they make in general, the increase in their profits from rising gas prices is just a consequence of how the free market operates, supply and demand etc.

It's like the huge profits supermarkets and online retailers like Amazon made during Covid and in particular the lockdowns. when there was literally a captive audience spending money like it had gone out of fashion .

When we had the financial crisis, Gordon Brown proposed a plan and banged a few G7 heads together that helped stop the cash machines running out of money.

Perhaps there are no such financial levers Govs can pull this time. Can these multi-nationals even be nationalised, and if so, at what cost? Does that cost outweigh the cost of the price increases?

I just feel that if it was a case of some 'constructive thinking' then I think we'd have seen Govs sitting down and thrashing something out, as it's in no country's interest for this crisis to continue the way it's going...

[malumbu]

Most of the oil and gas fields are in dodgy parts of the globe. The US, Canada and Norway cannot supply all of the West. Said not in 2022 but at a course I went to in 1984 on the economics of nuclear power. I've banged on elsewhere about Thatcher and gas.

Not a lot of help here but I can't stop reminding people.

[Spartacus]

I just feel that if it was a case of some 'constructive thinking' then I think we'd have seen Govs sitting down and thrashing something out, as it's in no country's interest for this crisis to continue the way it's going...

 

It's looking very much like the EU are starting to do just that, let's hope other governments, including ours, can join the discussion

BBC News - EU faces awful winters without gas cap - minister

https://www.bbc.co.uk/news/world-europe-62710522

[SpringTime]

Just seen some plum on the guardian.com's lead image with a placard stating "Eating or Heating, no one should have to choose"

I choose Eating every time anyway.

[Spartacus]

Strange week

The G7 announced a gas price cap to stop Russia dictating the price of gas swiftly followed by Gazprom announcing the indefinite cloure of Nord Stream 1 "due to a leak"

Meanwhile Russia appeared to be burning off excess gas at one of their drilling platforms .

The Far East has bought a lot of gas at a fixed long term futures price which ties up production for this winter at least which also has a knock on effect on the global gas prices.

What's the next steps that can be taken to keep global gas prices from spiralling even higher in the short to medium term ?

[jazzer]

UK should have done what the Far East did, buying huge amounts at a fixed cost, yet again late to the party because for the last 10+ weeks we've had no Government as such, a bloody disgrace, they need a piece dynamite shoved somewhere to make them (and I mean cross party) wake the hell up and start taking this cost of living and domestic fuel crisis SERIOUSLY.......

[Spartacus]

I could be wrong, but from what I read the far east bought gas on the futures market 6 to 12 months ago thus tying up any extra capacity in the system to shore up their exit from covid and a return to manufacturing.

Sadly, with a privatised market here and in parts of Europe, that didn't happen as there was a failure globally to predict what was about to happen

I agree, the solution needs cross party working but equally it needs a global response to what is happening at home and abroad.

We aren't the only country in this situation however the summer recess obviously didn't help nor did the whole fiasco over choosing a new leader which could have been compressed by weeks.

The solution isn't simple nor is it solely in the UKs remit alone as its a global crisis, despite the impression our media gives.

[malumbu]

Whoever is buying gas wholesale has to pay the market price whether it be government or the energy suppliers. Ofgem is there to make markets work. National Grid to ensure security of supplies. It works that is why your lights stay on and your boiler works.

It would only make sense to nationalise production and supply if the UK was self sufficient which it hasn't been since the mid noughties. As far as I am aware the state hasn't owned North sea oil and gas, rather it licensed exploration and extraction. Britoil was a national company but privatised in the 80s.

The mistakes were made over many successive governments as I have harped on about, starting with Thatcher. Coal was being phased out due to sulphur dioxide (remember acid rain?) Requiring old stations to need expensive modification and her hatred of the NUM and its members. She was passionate about nuclear, planned four new state built and operated nuclear power stations, only one was built, Sizewell B.

The heavy capital costs, long return on investment, waste disposal and management and other liabilities meant the private sector would not take this on without a large bung.

So hey ho she saw gas as the quick fix. Many of the population agreed as their share portfolios went up.

Successive governments did not help but the seeds were laid down by her. I wrote to government, even before Ukraine, asking ministers to admit to Thatch's mistake, but only got a response after I went through my MP. I felt a bit bad for the civil servants drafting the reply as I know more about historic energy markets and of course they have to use the standard anodyne response bigging up Johnson.

None of this helps solve the problem but I wish Panorama or similar would run a story along these lines.

Hydrocarbon production isn't a free market as most is owned by dodgy states, dodgy Princes and dodgy Oligarchs.