The British public is being royally ripped off by energy companies at the moment and it seems that no one wants to say a dickie bird about it. The new PM Liz Truss has announced a series of measures, but there are many questions that should be being asked that are not. Here are a few points.
1. Price of gas. We are told that the price of gas is driving the huge price rises. We are also told that the UK gets around 7% of it's gas from Russia. Let's work this through. The UK does not have a constant demand for energy throughout the year. In the Winter, we need far more light and heat. The UK ships in extra gas when demand outstrips regular supply. It is highly unlikely that we've burned any Russian gas this summer at all. The 7% will be an average estimate, if it's a mild winter it's less, if it's harsh its more (of course with spot markets, much of this will be us source getting the gas from the cheapest available source). I am not an expert in energy procurement, but I would expect the large companies to have long term deals to source gas. Ryanair has said that they can keep flight costs low as they have successfully hedged their energy costs and bought in advance. Given that energy is a fundamental, surely the UK's gas suppliers should do this for all but the most unexpected of excess demands? If they've already bought the energy on long term deals, they are fleecing us. If they have not, they have exposed the UK to risk and they should be nationalised.
2. Price of electricity.
Ever wondered how the UK produces it's electricity? Well you can find out in almost real time!
We are generataing 52% of our electricty from gas right now (08/09/2022). Around 23% is renewable sources. Nuclear is around 17%. So you can see how gas may influence the price of electricty, but much of this is predictable. Homes and businesses require stability above all other things. Again, we have to ask how much of this energy is produced from sources on long term contracts at fixed prices. If the answer is not "just about all of it" something has gone wrong. Of course, some might say "well when the market lowers prices, you don't complain", but the current situation has shown that if we are at the mercy of markets, we have no security at all.
3. Who is making the money?
This is an easy one. Just look at the share price of BP. A year ago, it was around 300p. Now it is around 50% more. This means that BP is worth half as much again as it was a year ago. If you'd invested two million quid in BP shares a year ago, you'd be sitting on a profit of a million pounds! If you are living in a mansion and your energy bills have doubled, but you are a BP shareholder, you are still quids in. Shell has also seen similar gains, up from around 1400 a year ago to 2270 today. It may or may not suprise you to learn that Liz Truss used to work for Shell. She clearly is well versed in all of the arguments why windfall taxes are a bad idea. The better off you are, the more likely you are to have energy stocks in your portfolio, directly as a shareholder or indirectly through a pension plan. Those at the bottom of the pile, those who are hardest hit by the crisis have no shares or pension pots to insulate them.
Sadly we don't live in a nation where the finances of ordinary people are considered when the government makes decisions.
.
Just to let you know I have shares in BP, so don't talk them down too much !
ReplyDeleteIf you took just some of the billions in profits made by the energy companies and you paid each and every household in the UKs energy bill
ReplyDeleteThe energy companies would still have billions in profits. Ask your self a question.
Do the government and energy corporate think we are mugs?
Take the power back, take all public services into public ownership