ENERGY MATTERS

[Tizer]

The energy required to get this thing off the ground seems to be prioritizing in the wrong place. Why a sudden interest in putting people back on the moon? Have I been watching too many disaster movies?
https://www.bbc.co.uk/news/resources/id ... 970d6ed7b5

I agree with the Astronomer Royal that it's barmy and we can do more, and better, and safer with robots and AI. Sending humans is just to satisfy vanity and the `see what I can do' urge of people like Musk.

[Stanley]

The only thing I know for certain about energy is that we are reaping the rewards of not having an integrated energy policy for over 50 years. All governments have kicked the necessary spending into the long grass and been encouraged to do so by the fossil fuel industries. As Bob Smith one said, we've plaited sawdust for years and now the pigeons have come home to roost.
Ken once more I agree with you, someone has led us up the garden path. There is no logic in bankrupting a nation.
[Unless this is Russia waging a world war by controlling energy.....]

[Wendyf]

The Thin Controller has just announced that at 3pm Friday we haven't used any electricity from the grid since midnight. Everything is running on solar. Don't ask me how it all works, I have requested a simple diagram.

[Stanley]

But they will still get you with the standing charges Wendy. We are all on a hiding to nothing.
Later.... News that Gasprom has suspended gas supplies via Nord Stream 2 pipeline indefinitely. They cite an oil leak on a turbine and blame it on not being able to get parts because of sanctions. It is seen as retaliation against the resolution passed yesterday to cap the price that will be paid for Russian oil.
This is almost certain to drive energy prices even higher.
This is open warfare.....

[Big Kev]

It's Nordstream 1 that's off indefinitely, Nordstream 2 hasn't received certification to be used yet. I suspect Russia will 'shoot themselves in the foot' financially by cutting off the supply to the EU.

[Big Kev]

Based on the new price cap my monthly direct debit will increase by £100.

[Tripps]

I read somewhere recently that Octopus had not decided on their new tarriff yet, and were waiting two weeks to see what the Government reaction to the crisis will be.

The figures recently for businesses (uncapped) and coming to the end of a fixed contract are scary.

[Big Kev]

I read somewhere recently that Octopus had not decided on their new tarriff yet, and were waiting two weeks to see what the Government reaction to the crisis will be.

The figures recently for businesses (uncapped) and coming to the end of a fixed contract are scary.

E.ON Next haven't told me officially, I was just basing it on the new cap. We are prepared, at work, for the end of the month price change. It usually causes a bit of chaos when they all do it together.

[Stanley]

British Gas response to me sending in gas mater reading was "Thank you. Your next payment isn't due yet and we'll ask for a reading nearer the time."
Problem is that my next payment on a monthly tariff was due in mid-August. I suspect that even though the web site says I am on a monthly tariff, the accounting department haven't realised this yet. I shall just make sure that when the bill does come in I am ready for it.....

[Big Kev]

The Manx government look to be taking a step in the right direction, it's got to be easier and cheaper to subsidise the suppliers. It could stop a lot of small businesses from going under and some households from choosing between heat or food.
https://www.bbc.co.uk/news/world-europe ... n-62726083

[plaques]

The Manx government look to be taking a step in the right direction, it's got to be easier and cheaper to subsidise the suppliers. It could stop a lot of small businesses from going under and some households from choosing between heat or food.
https://www.bbc.co.uk/news/world-europe ... n-62726083

The downside of subsidising the suppliers is that the subsidy pays for the full cost of the energy including the excess profits the supplier is making. In affect accepting the fact they are making excess profits which will have to be paid back later. Kier Starmer's (Labour) proposal is to have a windfall tax on the profits where the supplier loses part of the excess profit but the consumer pays a smaller bill with no delayed repayment. Subsidies are just kicking the can down the road with the tab to be picked up later.

[Big Kev]

I was under the impression the 37 domestic energy suppliers, in the UK, were restricted from making excess profit by the energy price cap. It's got to be easier to deal with 37 companies than sorting out the public.
A windfall tax on the wholesalers, who sell the 'raw materials' to the suppliers, could be used to subsidise the the cost to the public (on the proviso the suppliers keep their charges at a sensible level) or am I looking at things too simplisticaly?

Assistance also needs to be available for small businesses, they aren't protected by the price cap.

[Stanley]

Our discussions on how relief should be given to domestic and business users to protect them from the enormous price rise is an example of what will be happening in governments. They will be discussing what to do while people and businesses go to the wall. In the first instance the help must be direct subsidy to pay the bills to protect the customers while longer term solutions are worked on. Speed is of the essence if you are already in difficulties.....

[plaques]

I was under the impression the 37 domestic energy suppliers, in the UK, were restricted from making excess profit by the energy price cap. It's got to be easier to deal with 37 companies than sorting out the public.
A windfall tax on the wholesalers, who sell the 'raw materials' to the suppliers, could be used to subsidise the the cost to the public (on the proviso the suppliers keep their charges at a sensible level) or am I looking at things too simplisticaly?

Assistance also needs to be available for small businesses, they aren't protected by the price cap.

As I understand it Centrica supplies gas from the North Sea but also buys gas for the UK on the global market. Although the UK does't have a pipeline directly from Russia If Russia switches off the supply to Europe then the global spot prices increase and Centrica increases their prices accordingly. By just following the increase in prices without adding more expensive infrastructure they are making eyewatering profits, These are the profits that Labour wants to windfall tax.
The retail suppliers, Octopus etc, buy from Centrica but have profits limited to 1.9%. Their profits increase as the price increases but at they same time they could lose if the forward prices increase during the 'capping' period. This is why a lot of the retail suppliers went bust earlier this year. This is the reason why the capping reviews have been shortened to months rather than years.
The capping periods only apply to domestic customers who are 'protected' between price reviews. Businesses are not capped and can suffer increased prices immediately which is thought by some to be in excess of what is really justified. There appears to be a good case for capping business users so that they can plan ahead.
On subsidies to customers. the question is should the subsidies come from windfall taxes on excess profits or leave the profits in place and subsidize from a loan from the basic suppliers to be paid back later?

[Whyperion]

The only thing I know for certain about energy is that we are reaping the rewards of not having an integrated energy policy for over 50 years. All governments have kicked the necessary spending into the long grass and been encouraged to do so by the fossil fuel industries. As Bob Smith one said, we've plaited sawdust for years and now the pigeons have come home to roost.
Ken once more I agree with you, someone has led us up the garden path. There is no logic in bankrupting a nation.
[Unless this is Russia waging a world war by controlling energy.....]

Apparently Putin did a PhD with thesis on Russian Energy and its impact on the rest of the world.

[Stanley]

Ken, I suspect that over the next few months we will get as fed up with the frequency energy prices figure in the news as we were about Brexit.
And still we wait to hear what Liz Truss is going to do..... It all frightens me to death.

[plaques]

Apparently Putin did a PhD with thesis on Russian Energy and its impact on the rest of the world.

That wouldn't surprise me one bit. Russia has enough carbon energy to keep itself going for ever what it doesn't have is the North - South spread to produce food throughout the year. I see the Ukraine grab as an attempt to ensure food supplies. This is still not an excuse for having a war and killing people.

Edwina Curry has fallen out with the money saving expert for saying the energy price increases would be catastrophic for people. She seems to have forgotten that the average savings for the UK is £6,757. A £7000 energy bill would wipe out 50% of the population. Also remember that 25% have ZERO savings. If that isn't a catastrophe what is?.

[Whyperion]

It looks like Truss is going to govt back Consumer Energy Supply companies to borrow £100bn+ to keep Energy Prices at the same present day cap rate for the next two years. Details on Thursday. I assume the gamble is that Ukraine Vs Russia will be over in a year (and it will be energy recieved as usual) and the loan can get repaid from additional excess profits for the succeeding year/s. Businesses MIGHT get a similar scheme ( basically if they dont then it is still rampant inflation / loss of buisnesses in UK - I am surprised we are still making thing ).

[Stanley]

Quite right Ken. The poor (and that includes me!) were left swinging in the wind yesterday by the Truss Downing Street speech. She showed no sign that she or her advisers (who vetted the speech) had any thought at all for the millions who are sick with worry and watching their capacity to survive shrinking daily.

[plaques]

Still largely speculation but all the signs are is that Truss will borrow £Billions and keep the excess profits in place. Meanwhile the EU is looking at windfall taxes on the energy companies. What a good job we got Brexit done otherwise we wouldn't have had the pleasure of being in debt for the next 10 years paying off the bill we could have quite easily avoided. At one time debts like this used to be called 'black holes' but it now appears it only applies to when Labour is in government.

We now hear that the OPEC countries are proposing to cut back on oil production to keep prices up. Another blow to the cost of living. Of course we could always borrow a few more £Billion to keep prices down. As the say Two black holes is better than One.

[Stanley]

All I can say Ken is that we are in the deepest hole I can ever remember, and that includes WW2. Rather than repeat what we are all thinking, here is something I wrote in 2006 referring to a paper I wrote thirty years before. See if it makes any sense....

ENERGY MATTERS.

As you know, I call these papers ‘Naïve Occasional Papers’ because I’m quite sure that many of you read them and think ‘Well, I thought everyone knew that!’ My mate David Moore convinced me years ago when he suggested the idea of the NOPS that this should never be a bar to writing your thoughts down, the worst that can happen is that you get ridiculed and who knows, you might have stumbled on an original slant on a problem or concept. I don’t hold out much hope of that for this one……

The news of the bombings in Mumbai got me to thinking about the similarities between unprovoked attacks on civilians and the sort of tribal warfare that was the norm from the dawn of history. I made a jump from there to a paper I wrote for myself thirty years ago about the concept that when you get down to the roots of the problem, most modern wars are about energy. I remember musing that perhaps the last best hope for a peaceful world was energy from fusion and I still cling to that.

I think that the factor that triggered the link between tribal warfare and energy was re-reading Anthony Sampson’s book ‘The Seven Sisters’, his account of the history and machinations of the major oil companies. First published in 1975 it is still a good informative read. The bottom line of the book could be said to be that governments used the ‘independent’ company’s control of world oil supplies as instruments of foreign policy.

Assuming that my theory about the difference between tribal conflict and wars over energy is valid, when does the transition take place? There is a case for saying that the wars waged in the ancient world for territory were actually for slaves and this at a time when animal and human muscle was the only energy source available for performing useful work like building temples, tombs and architectural statements of superiority. Therefore, wars for territorial acquisition were forced on the protagonists by the need for energy.

I’m quite attracted to the idea that in societies that have no use for energy beyond that which is needed to produce enough food to live, and in many of these systems there was no concept of land ownership, the only trigger for violence against others was tribal difference. The same mechanism that leads normal crows to mob an albino, and come to think, probably a major cause of the witch-crazes. It seems to me that the current problem of a global jihad might come under this heading and maybe that is the reason why the ‘civilised and modern’ Western societies never recognised the problem as it arose and have no idea beyond punitive force of how to deal with it now it has arrived.

Imagine a situation where two obsessed individuals were fighting to the death and each had a completely different reason for doing it. In this case, the jihadists are fighting a tribal and religious war for an abstract concept and their protagonists are resisting on the grounds of a search for stability and the control of sources of energy. There’s something in this idea I think and one thing is sure, such a hypothesis goes a long way to offering an explanation as to why both sides cannot make any sense of the other.

Suppose that Bush and Blair took the course that they did because they were convinced that they needed ‘stability’ in the areas of the world that are our major source of energy. I know that they would argue that it isn’t as simple as this but we have to cut away the undergrowth of justification in order to clearly view the trees that are the root cause of the policies. I am convincing myself here that this was what was going on and that the reason why they chose exactly the wrong method to achieve their ends was that they didn’t understand what was driving the opposition. They were thinking about territory, control and energy, the jihadists were only thinking about tribal difference.

I’ll leave that alone now and have a brief look at what this idea suggests if it is correct. I’m reminded of the old Irishman who was asked the best way to Dublin who started his instructions by saying that if he was going he wouldn’t start from here! Hindsight is a wonderful thing and my opinion is that anyone who continues to deny that all our actions in the Middle East have done nothing but make the situation worse are either dishonest or deluded. We have to start from here and the best way to do it is to inject some honesty into the situation. Unfortunately I don’t think this is possible with the entrenched and defensive attitudes we see every day in the manner in which we are dealing with this. Perhaps what we need is regime change. I fear we will see no improvement in policy until both Bush and Blair are out of office, and even then, change isn’t certain, it can only be a hope. So my message is hold tight kids, we are in for a bumpy ride for at least another four years. What a prospect……

SCG/12 July 2006

I was being a bit too optimistic!

[Big Kev]

From the BBC
What help will businesses get with bills?

Businesses, charities, schools and other organisations will also receive help.

At present, these places don't have an energy price cap similar to that for households.

The government says they will now get an "equivalent guarantee" on energy prices for six months.

After six months, "vulnerable" businesses - including pubs - will receive further support.

In three months' time a review will be carried out to identify where the extra support should be targeted.

[Stanley]

I have a load of washing in on a hot wash. We are told that with modern detergents this is not sensible of necessary considering the price of energy but I'm afraid my attitude is that the occasional hot was is good for the machine and they are going to hammer me with standing charges if I did a hand wash!

[plaques]

A quick review on the so called energy crisis.
The supply firms like Centrica have monopoly of supply had have the potential to charge what they want. The whole purpose being profit and bugger the economy.
Liz Truss is tied to an extreme right-wing Tory ideology of profits good, social equality bad. The talk of windfall taxes is against Conservative principles ignoring the fact that Margaret Thatcher and Geoffrey Howe had two bites at the cherry and Osbourne called it by a different name. Now it appears that the Tory government is to follow a plan suggested by the energy companies. How cynical can you get.

The companies are offering a cut in prices providing these are offset by government loans which are to be paid back over years by the tax payer. The prices freezing isn't immediate but after an interim rise taking the average bill to £2500 per year.

The freeze will have two elements...
!) The standing charge. Which is equivalent to a regressive tax hitting the poor harder than the rich, ie: a bigger proportion of their income.
2) The unit cost per KWh of electricity and gas. Again regressive in that those with big incomes pay a smaller relative proportion per unit against income. This fact is hidden by the fact that the more you use the more you pay.
Smart meters may ultimately change this rating.

What is the effect of the government raising massive loans.
1) It comes at a time that the interest rate on it will be much larger than normal.
2) The debt (black hole) will limit spending on infrastructure and social benefits, NHS down to zero. Another bit of right-wing ideology.
3) The cost of living spiral will level off but at an higher overall rate than that if we went for a windfall tax.

All this will be fully explained in language and charts that nobody can understand but will brain washed into thinking its good for the country. Another 'get Brexit Done' I'm afraid.

[Stanley]

I'm sure you are right Ken. What strikes me is that the current distractions are allowing the government to go on hold about the economy but all the angst and strikes are building up out there and will come crashing in as soon as Chuck is crowned. This delay is making things worse in the long run.
By the way, I see that people are still talking about 'the possibility of recession'. I thought we were past that point and it's quite obvious we are into recession now and heading for depression next year.....