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why does UK gvt blame energy prices on Russia, when the Uk is close to energy independence. yeah central european countries that need to import energy from russ

by dzonga 4y ago

why does UK gvt blame energy prices on Russia, when the Uk is close to energy independence. yeah central european countries that need to import energy from russia, okay. the reason energy bills are so high is energy companies thought they could get away with it, and they did. Shell just reported massive quarter profits. and the Uk will just let them scoot free

Balero 4y ago
Because if they don't blame energy prices, they will have to face that it is in part down to Brexit. (and some other complicated hard to explain reasons that won't make for a good soundbite, so people will only focus on Brexit) Brexit is basically a religion for the current Conservative party, and it absolutely can not be questioned, or criticised.
- ogogmad 4y ago
  But isn't most of the developed world experiencing a recession? The US is energy independent, not having a Brexit, and still experiencing high inflation.
  - Applejinx 4y ago
    We did have a Boris Johnson-like figure running things for a while there.
    - tialaramex 4y ago
      Trump isn't quite like Johnson. Johnson is a liar. Trump is a bullshitter. Johnson knows what the truth is, and is actively trying to deceive or confuse you. Trump has no idea what truth would be even in principle, he's just making whatever noises seem to work. Probably this makes Johnson a worse person, and Trump a worse leader? I'm not sure.
lozenge 4y ago
If the UK insisted on purchasing gas at a lower price then companies would just export the gas instead of selling it domestically. The mistake was selling off the rights of fossil fuels to private companies in the first place.
- LatteLazy 4y ago
  I believe OPs point is we could just ban Export of gas. This will fail for a few reasons: * We import 101 other things from the EU (from food to medicine to electricity), if we bad export of energy, they will stop exporting those in retaliation. * We're not that independent, we might be close right now (because it's the height of summer) but we desperately need Norway and Belgium's gas come the autumn * Energy is a raw material in basically every manufactured product (this is why the US usually refuses to export natural gas). What this means is, if you cannot export energy as gas, you end up just using it to make manufactured products and exporting those instead. So rather than cutting domestic bills, you just end up giving a huge subsidy to energy intensive industries (like steel and aluminium production). Maybe you want to do that (the US explicitly prefers manufacturing jobs to energy production jobs). But it won't actually cut prices, it will just move jobs from outside the export ban to inside it...
bryanlarsen 4y ago
Price is set at the margin, it's set by the least expensive product necessary to meet demand. Demand in England is more than can be met by cheaper internal energy, so the price is set by the more expensive fossil energy. If demand falls enough that it can be met by the cheaper sources, the more expensive sources would be locked out and the price would be set by the internal sources. In the mean time anybody who can produce cheaper than the marginal price books a profit on the difference. In this case, a lot of it.
- fulafel 4y ago
  This is the case in some market systems but is no law of nature. It results in big windfall profits. High fossil prices are a very fortunate thing though as we need to ramp down their use quickly to mitigate climate disaster, so this system is currently right by accident.
  - bryanlarsen 4y ago
    It's a direct consequence of there being a single price. It generally only applies to commodities. It usually results in low profits because the cost of production does not vary wildly between vendors. Farmer Joe and Bob have roughly the same costs per bushel of wheat, so farm profits are generally quite low. Energy windfall profits are the exception, not the rule. Windfall profits are usually only found in non-commodity markets like software.
- ZeroGravitas 4y ago
  One interesting angle, that I've not seen explored is the impact of this on CfD contracts. Basically the UK government told renewable energy providers that they'd top up their income to a minimum amount per unit of electricity, to de-risk investing in renewable energy and remove volatility in expected income. If the electricity price rises, by one pence, then that's one pence less the government needs to pay them, and since people are the government, it's a (very convoluted) no-op, except that you're paying the money up front, and not in taxes. It appears we're saving 10s of Billions via these schemes, but not sure exactly how much of that is just because renewables are cheaper than other energy providers, how much because of this particular scheme etc. https://www.current-news.co.uk/news/cfd-projects-to-save-britain-7bn-under-current-prices https://www.current-news.co.uk/news/cfd-projects-to-save-bri...
chippiewill 4y ago
The UK isn't close to energy independent. It doesn't have enough gas for it's own purposes. Shell might have massive profits, but it's a massive transnational organization and most of those profits are made outside of the UK.
vanilla-almond 4y ago
why does UK gvt blame energy prices on Russia, when the Uk is close to energy independence The UK is not energy independent. Although it imports less than 5% of its gas from Russia, it is affected by global gas prices and demand. Most UK homes are heated by gas. The average energy bill was £1,400 a year in October 2021. In April 2022, energy bills rose to around £2,000. It is estimated bills will rise to £3,400 a year from October, then to £3,600 a year from January 2023 [1]. Unless I am mistaken, these are some of the highest energy bills in Europe. Meanwhile, the currently government has no plan or urgency to tackle the cost-of-living crisis. Instead, we have a navel-gazing Conservative party pre-occupied with who should be Prime Minister. (A choice between two terrible candidates). [1] Warning winter energy bills to rise by more than expected https://www.bbc.co.uk/news/business-62380728 https://www.bbc.co.uk/news/business-62380728

by dzonga 4y ago

Balero 4y ago

Because if they don't blame energy prices, they will have to face that it is in part down to Brexit. (and some other complicated hard to explain reasons that won't make for a good soundbite, so people will only focus on Brexit) Brexit is basically a religion for the current Conservative party, and it absolutely can not be questioned, or criticised.

ogogmad 4y ago
But isn't most of the developed world experiencing a recession? The US is energy independent, not having a Brexit, and still experiencing high inflation.
- Applejinx 4y ago
  We did have a Boris Johnson-like figure running things for a while there.
  - tialaramex 4y ago
    Trump isn't quite like Johnson. Johnson is a liar. Trump is a bullshitter. Johnson knows what the truth is, and is actively trying to deceive or confuse you. Trump has no idea what truth would be even in principle, he's just making whatever noises seem to work. Probably this makes Johnson a worse person, and Trump a worse leader? I'm not sure.

lozenge 4y ago

If the UK insisted on purchasing gas at a lower price then companies would just export the gas instead of selling it domestically. The mistake was selling off the rights of fossil fuels to private companies in the first place.

LatteLazy 4y ago
I believe OPs point is we could just ban Export of gas. This will fail for a few reasons: * We import 101 other things from the EU (from food to medicine to electricity), if we bad export of energy, they will stop exporting those in retaliation. * We're not that independent, we might be close right now (because it's the height of summer) but we desperately need Norway and Belgium's gas come the autumn * Energy is a raw material in basically every manufactured product (this is why the US usually refuses to export natural gas). What this means is, if you cannot export energy as gas, you end up just using it to make manufactured products and exporting those instead. So rather than cutting domestic bills, you just end up giving a huge subsidy to energy intensive industries (like steel and aluminium production). Maybe you want to do that (the US explicitly prefers manufacturing jobs to energy production jobs). But it won't actually cut prices, it will just move jobs from outside the export ban to inside it...

bryanlarsen 4y ago

Price is set at the margin, it's set by the least expensive product necessary to meet demand. Demand in England is more than can be met by cheaper internal energy, so the price is set by the more expensive fossil energy. If demand falls enough that it can be met by the cheaper sources, the more expensive sources would be locked out and the price would be set by the internal sources. In the mean time anybody who can produce cheaper than the marginal price books a profit on the difference. In this case, a lot of it.

fulafel 4y ago
This is the case in some market systems but is no law of nature. It results in big windfall profits. High fossil prices are a very fortunate thing though as we need to ramp down their use quickly to mitigate climate disaster, so this system is currently right by accident.
- bryanlarsen 4y ago
  It's a direct consequence of there being a single price. It generally only applies to commodities. It usually results in low profits because the cost of production does not vary wildly between vendors. Farmer Joe and Bob have roughly the same costs per bushel of wheat, so farm profits are generally quite low. Energy windfall profits are the exception, not the rule. Windfall profits are usually only found in non-commodity markets like software.
ZeroGravitas 4y ago
One interesting angle, that I've not seen explored is the impact of this on CfD contracts. Basically the UK government told renewable energy providers that they'd top up their income to a minimum amount per unit of electricity, to de-risk investing in renewable energy and remove volatility in expected income. If the electricity price rises, by one pence, then that's one pence less the government needs to pay them, and since people are the government, it's a (very convoluted) no-op, except that you're paying the money up front, and not in taxes. It appears we're saving 10s of Billions via these schemes, but not sure exactly how much of that is just because renewables are cheaper than other energy providers, how much because of this particular scheme etc. https://www.current-news.co.uk/news/cfd-projects-to-save-britain-7bn-under-current-prices https://www.current-news.co.uk/news/cfd-projects-to-save-bri...

chippiewill 4y ago

The UK isn't close to energy independent. It doesn't have enough gas for it's own purposes. Shell might have massive profits, but it's a massive transnational organization and most of those profits are made outside of the UK.

vanilla-almond 4y ago

why does UK gvt blame energy prices on Russia, when the Uk is close to energy independence The UK is not energy independent. Although it imports less than 5% of its gas from Russia, it is affected by global gas prices and demand. Most UK homes are heated by gas. The average energy bill was £1,400 a year in October 2021. In April 2022, energy bills rose to around £2,000. It is estimated bills will rise to £3,400 a year from October, then to £3,600 a year from January 2023 [1]. Unless I am mistaken, these are some of the highest energy bills in Europe. Meanwhile, the currently government has no plan or urgency to tackle the cost-of-living crisis. Instead, we have a navel-gazing Conservative party pre-occupied with who should be Prime Minister. (A choice between two terrible candidates). [1] Warning winter energy bills to rise by more than expected https://www.bbc.co.uk/news/business-62380728 https://www.bbc.co.uk/news/business-62380728