Energy affordability crisis

[Londonlisa2001]

There are two things that can push prices up for something - an increase in demand, or a decrease in supply.

In this case, the throttling of gas supplies by Russia in response to sanctions imposed by the West has greatly reduced the supply of gas to the EU. As a result, they need to fill up their requirements from elsewhere and the price of gas goes up for all of us as a result.

In some scenarios when market forces mean that there is a severe shortage of something, everyone (the consumer that is, both personal and business) just stops buying it or buys an alternative. In this situation we can’t as we are so reliant on gas for electricity generation. As the weather gets colder throughout Europe, the need for domestic gas for heating etc will also greatly increase. Hence price rises.

We have a perfect storm though on oil as well. As, again, war in Ukraine, together with sanctions on Iran, the increase in production again in China post pandemic etc etc etc means the crude prices increased (as other suppliers refused to increase their supplies to compensate so they can maximise profits). We also are stuffed as oil and other commodities are traded in dollars and sterling has collapsed due to brexit and also the amount of quantitate easing we had to pay for furlough. It goes without saying that fuel costs increase the price of everything, particularly food and other consumables.

I'm not buying that, they are 100% taking the piss Lisa. Okay things go up depending on demand, but not this much. Same as fuel prices, they are buying it cheaper now than months ago, but the price at the pump is still sky high.

Okay, so what explanation for my eclectic bill tracking the price of my gas bill, when it is meant to be 100% renewable? Surely importing gas / oil from wherever, won't affect this price?

I'm not being awkward, I'm genuinely tamping and concerned for family members, when all i can see is greedy corporations making billions upon billions.

Oh, I was answering the question yo7 posed about why gas prices had risen.

If you are asking why they’ve gone as high in the U.K. as they are now, it’s more complex.
Firstly, as explained, wholesale prices have gone up enormously. Secondly, as explained the weak pound makes everything worse for us at the moment.
Thirdly the companies are applying the same multipliers on cost as they normally do. When cost goes up, those multipliers (margins) go up and the effect of rises is made worse. Also they are allowed to here and because, for example, EDF in France is being capped at 2021 prices, they are making up their shortfall in France by charging more in the U.K. because our government allows them to (remember they are owned by the French government). Also our government applies tax. And again, the higher the cost, the higher the tax. The government are raking it in due to the high costs at the moment. On energy, fuel and food. Their budget is based on 8ncome streams far lower than is happening. Which is what they’ll use to make some sort of gesture when Truss gets in.

The renewables cost bit is simply they can, so they are.

I imagine anyone sensible is angry. We have an utterly inept shower of crap running us and they don’t care. Their idea of economising is buying Waitrose Essentials. They don’t understand the fear I don’t think.

Having said that, I have no doubt that Truss will do something. She will because she has to and to attempt to gain favour in her first few weeks. I expect a cut in VAT, an extra discount off bills, possibly the temporary abandonment of tax on energy, reverse of NI rise, possible reduction in income tax and corporation tax, removal of green levy.

It will crap all over our economy but I’m not sure it matters at this stage. Unless we grow out of this we are done anyway until we sort out the elephant in the room.

 

[Itchysphincter]

Another thing, what is actually driving the prices up? Don't just reply Brexit, or Ukraine, explain to me how and why if you can.

Before Brexit and Ukraine prices were on the rise due to insatiable demand for power in China and other developing nations. Wholesalers are able to sell for more, especially if the choose not to increase output. Couple that with the collapse of the pound, partly Brexit related, and you’ve got a rock and a hard place.

As for not reducing the price cap - Russia has got Europe by the balls and the UK is not going to keep supplying support on the never never. Winter is coming and the Tories need to lift sanctions somehow, either with Russia defeated which is highly unlikely, or people in the UK losing support and blaming Ukraine for them starving or freezing their nuts off. If the government subsidise this crisis they won’t be able to stop the goodwill of the British people and the support for Ukraine. They need us to think it’s our fault when they turn the taps back on.

 

[MajorR]

Whilst there are issues regarding cost increases, I also reckon there an element of profiteering and that we’re being taken for a ride and being ripped off as the attached by the BBC points out. Round my way, Independent garages are cheaper than the supermarkets and 1 Indy is 12p a litre cheaper than a supermarket. We need more competition.

https://www.bbc.co.uk/news/business-62494404

 

[Neath_Jack]

https://twitter.com/jdpoc/status/1557449791147315206?s=21&t=4dB5Tk_URYWVblMwxsZaUA

 

[Neath_Jack]

https://twitter.com/walesonline/status/1557589123279605761?s=21&t=4dB5Tk_URYWVblMwxsZaUA

 

[legoman]

Just watched a government minister on BBC breakfast attempting to defend the government's inaction on this looming crisis.

It's clear to me they just don't get it. This time next year the economy will grind to a halt as people up and down the country will simply be staying home in order to pay their rent/mortgage and energy bills and what food they can afford and NOTHING else. The impact on the leisure industry will be catastrophic as indeed it will be on all areas of non discretionary spending. Watch as millions cancel Sky subscriptions and the like.

Its like watching a plane crash happening in slow motion. I truly fear for people in the UK now.

 

[TheLoneRanger]

FFS ...


https://inews.co.uk/inews-lifestyle/money/bills/energy-price-cap-rise-5000-2023-forecast-bills-1789438

 

[K23]

Just watched a government minister on BBC breakfast attempting to defend the government's inaction on this looming crisis.

It's clear to me they just don't get it. This time next year the economy will grind to a halt as people up and down the country will simply be staying home in order to pay their rent/mortgage and energy bills and what food they can afford and NOTHING else. The impact on the leisure industry will be catastrophic as indeed it will be on all areas of non discretionary spending. Watch as millions cancel Sky subscriptions and the like.

Its like watching a plane crash happening in slow motion. I truly fear for people in the UK now.

If the government continue to fiddle while Rome burns for another couple of months, I'm sure there are going to be some pretty serious riots because the situation is unsustainable now but getting worse at an incredibly steep rate.

 

[Longlostjack]

Meanwhile the French Government is in the process of taking full control of EDF. There was an argument back in the day for privatising the likes of British Airways. But the utilities? It was all meant to be about creating competition for consumers. As if ! The energy industry is strategically important.
I live in Germany and the mantra last year was North Stream 2 is basically a good business decision good for German industry. Cheap Russian gas. Same mistake. Leaving essential strategic planning to the markets.Time for a change - Thatcher’s legacy casts a long shadow.

 

[Pegojack]

Meanwhile the French Government is in the process of taking full control of EDF. There was an argument back in the day for privatising the likes of British Airways. But the utilities? It was all meant to be about creating competition for consumers. As if ! The energy industry is strategically important.
I live in Germany and the mantra last year was North Stream 2 is basically a good business decision good for German industry. Cheap Russian gas. Same mistake. Leaving essential strategic planning to the markets.Time for a change - Thatcher’s legacy casts a long shadow.

As I've said, the number one priority of an incoming centre-left government has to be root and branch political reform.
Hot on the heels of that though, is reform of utilities and transport. Renationalisation needn't be immediate, prices can be controlled by other measures such as enforced windfall taxes and price subsidies (like here in Spain) on energy and water companies, but it could be done as and when. The rail companies as their franchises expire, for example.
After that, relations with the EU have to be the focus, reversing the most disastrous effects of Brexit. Get back into the single market to put British business back on an equal footing, and get a deal done on free movement of labour to ameliorate the huge pressure on social care and the NHS, as well as agriculture and the service sector.
They won't be short of things to do, will they?

 

[legoman]

Just watched a government minister on BBC breakfast attempting to defend the government's inaction on this looming crisis.

It's clear to me they just don't get it. This time next year the economy will grind to a halt as people up and down the country will simply be staying home in order to pay their rent/mortgage and energy bills and what food they can afford and NOTHING else. The impact on the leisure industry will be catastrophic as indeed it will be on all areas of discretionary spending. Watch as millions cancel Sky subscriptions and the like.

Its like watching a plane crash happening in slow motion. I truly fear for people in the UK now.

 

[Uxy]

I still don’t understand why not reverse the last price cap rise and scrap the next one.

Easy. That will eat into the profits of the companies, probably turn into losses, and the Govt will simply rather do anything else.

The current profit levels are obscene, and show the utter nonsense of the current approach. I'm not necessarily saying that the cap needs to stay as it is, but it certainly needs to be in the ballpark of manageable for most, and support given to the rest.

The Truss idea of cutting income tax to resolve the issue is economic illiteracy at its finest. Loads of people don't pay any, and they're the ones most affected. Shaving a couple of points off the basic rate isn't going to make a dent in the increase of those middle-income families who are in danger of being the most affected.

Say what you want about Gordon Brown, but during the 2008 crisis he was actually a world leader. Some no-mark will make some comment about gold I'm sure, but his prompt action avoided the excesses of what could have happened. He's bang on about this.

I'd like to think this will bring about a decent debate about nationalisation and where it is or isn't appropriate. Things like energy, like transport, would seem a classic case of how you simply can't leave things to the free market.

 

[Cooperman]

https://twitter.com/walesonline/status/1557589123279605761?s=21&t=4dB5Tk_URYWVblMwxsZaUA

I filled up this morning at the local village garage, first time I have purchased fuel there in at least ten years. 2p per litre cheaper than Tesco.

 

[A4Jack]

Cheapest unleaded anywhere I've seen is Drefach 155.9 amazing the price difference!

 

[Neath_Jack]

https://twitter.com/walesonline/status/1557589123279605761?s=21&t=4dB5Tk_URYWVblMwxsZaUA

I filled up this morning at the local village garage, first time I have purchased fuel there in at least ten years. 2p per litre cheaper than Tesco.

My local garage is a lot cheaper than Tesco. £1.61 for unleaded and £1.76 for diesel. Still astronomical mind