Sunday, 30 October 2022 — The van says…
Hot air from the politicians, yet no heat for the people
We have seen some pretty scary stories coming out of the UK of late, and the ones regarding its energy situation are even worse than those concerning the political rollercoaster that London has become of late. This shorter article will take a wry look at what it’s all about.
Play then Pay
The UK, just like most other nations, has a system where an energy company supplies a customer and then sends a bill every three or six months. The user then pays within a given timeframe or has their supply cut off.
Fossil fuels are imported to the UK throughout the year, but shipments are increased during the fall in order that reserves are kept high in case of a spike in demand during winter when consumption is highest. During spring, the now lowered reserves are allowed to dwindle to a certain point, the companies not wanting to have money unnecessarily tied up in resources.
The Green Game
Recent years have seen the UK at the vanguard of ‘green energy’, spending immense sums of money on cleaning up plants that use fossil fuels as well as making big moves towards using renewable energy sources. In terms of power generation, this has meant a move away from coal and oil, gas being the preferred means of producing thermally-generated electricity. Renewables are also in full swing, and have been heralded as the power stations of the future, yet with wind energy leading the way, it only stands to reason that the UK is only capable of generating viable amounts of electricity when there is the wind necessary to turn the turbines. With the publicity that these projects have gained (on a windy day, turbines can account for more than 30% of the UK’s output), a great number amongst the population were under the impression that projects such as these made other sources largely irrelevant to the overall situation.
Nuclear power has had its fair share of ups and downs, yet in the UK, due to a greater reliance on wind power and the vagaries of the weather, atomic energy generates up to about 25% of Britain’s power. For most of the time, nuclear power plants are there to take up the slack when washing machines are turning but the wind turbines are not.
It may come as a surprise to many, but in spite of Russia being a huge energy exporter, the UK was not the huge customer of Moscow that many presume. According to commonslibrary.parliament.uk
‘In 2021 imports from Russia made up 4% of gas used in the UK, 9% of oil and 27% of coal. In 2021, imports of gas, oil and coal from Russian to the UK were worth a combined £4.5 billion.’
This is only a small fraction of the UK’s energy needs, yet just as western governments move in lockstep, so do markets.
This is where things start to go a little awry. With Russia having launched its Special Military Operation in the Ukraine, London and its global chums have gone into an apoplectic fit, and in doing so, western governments have decided to cease all fossil fuel imports from Russia. The UK energy sector does share a number of similarities with its European counterparts, yet huge purchases from Russia is not one of them. Germany for example imported 55% of its gas from Russia in 2021, and with other western nations also formerly very heavily reliant on Moscow’s materials, their change in purchasing means other exporters are now very stretched. With that has come a surge in prices which unsurprisingly is having dire effects on both public and business alike. Another difference between the UK and its contemporaries is that Britain with its green crusade today only has three coal-fired power stations remaining. Not only do other nations have more of these plants still in operation, but coal is much more available on world markets than either oil or gas, meaning that other states have not backed themselves into a corner as the UK has.
The Middle East has traditionally been the axis around which oil and gas production has revolved, and to that end, the US attempted to bring its presumed leverage into play in order to alleviate supply issues caused by the move away from Russian fuel. With fresh leadership in Riyadh rejecting the tired politics from Washington however, Biden’s failed in his efforts to get the Saudi leadership to increase production. This snub was simply unexpected and speaks volumes of the changing political landscape both in the Middle East as well as across the globe. Statecraft aside, this meant that for those nations who chose to sever ties with Moscow, matters could not be worse.
Looking as to how this affects the subject of this article, one now has to look at how the UK is situated in Europe, from both the political and generation perspectives. Whilst the country changes Prime Ministers on a regular basis, its loyalty to transatlantic politics never wavers, and this is the root of the problem. Having made the decisions that it has, those, along with its unique power generation profile profile, means that both through whim and by wind, it simply cannot generate power as cheaply or reliably as its European neighbors. This root of the problem is however the root of others, these being much further reaching than just power.
The Price of Power
With energy prices soaring, an already impoverished public is having to dig ever deeper in its pockets to keep the lights on. The UK minimum wage (which is increasingly prevalent in the British labor market) is hardly enough to cover basic necessities and with poverty (especially amongst children) sharply rising, tens of millions are already suffering due to the effect of fuel prices as well as the knock-on effect this is having on the price of transportation for everyday goods. With gas and electricity now soaring in price, the British consumer is about to pay for London’s acquiescence to global powerplay.
That acquiescence isn’t bad news for everyone though. With the US having vast reserves of gas and oil, it knows very well that a dearth of supplies may bring its shale industry back to life, even if that involves the deaths of some economies. As shipments from Russia to Europe finally peter out, we can only expect more shipments from across the Atlantic as Washington ‘rescues the Old Continent from the clutches of Russia.’
The Price for the Public
Whilst the UK claims to be a global power, its own people need hot water bottles due to power bills.
According to Statista.com, the price of electricity in the UK has risen from £57.18 per megawatt hour in March 2021 to a staggering £263.79 in March this year, these being the latest figures quoted. These costs are naturally passed on to both private customers and industry alike, it not being difficult to see why people are having to apply for loans in order to pay their bills whilst businesses go to the wall, therefore creating employment issues to further blight the economy.
London, in an act of foolish political bravado, decided to cut itself off from Russian energy, yet in doing so, it will force energy suppliers to cut off millions of customers. By choosing to play Russian Roulette with its own economy, it foolhardily gambled with its future through its efforts to play the transatlantic game. With rhetoric aplenty, the UK government thought it could stymie Russia without ever considering the possible consequences. In short, it cut off its supplies to put a smile on Uncle Sam’s face, yet the endgame will see rash politics cut the throat of the British economy.
Half-baked politics have now resulted in its people being scared to bake a cake, yet the abundant hot air from London now means that its people are now getting very badly burnt indeed. As the fall turns to winter, Hallowe’en is upon us, but rather than the UK public being afraid of the dark, they are now frightened of putting on the lights…
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