Monday, June 09, 2008
More Gas Price Rises On the Way
The papers report this morning that the hike in oil prices may result in a 40 per cent rise in gas prices on top of those that have already happened. We don't have gas at home but a friend of mine in Norwich told me that their gas supplier has just told them that their monthly direct debit needs to rise from £38 to £71 to continue to receive the same level of supply. If that kind of rise is being seen all over the country, next winter could be a very bleak one indeed for some people.
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There are also signs that it will be rural parts of the UK that will be hit the hardest under the credit crunch. A report from the North Wales Daily Post shows that rural Wales is suffering badly and I am sure the same will apply to rural parts of England.
http://www.dailypost.co.uk/news/north-wales-news/2008/06/07/credit-crunch-will-hit-rural-wales-hardest-55578-21038821/
It's all the fault of this Labour government.
Fuel and food prices will go back down when we have a Conservative government.
Its a good job that the planet is warming up isn't it.
In 2005 I attended a corporate event where Digby Jones was the post dinner entertainment.
Apart from the fact that he looked like Terry Scott's younger, but much bigger brother and sounded like he was "holding forth" at the bar of a suburban golf course for most of the time, the most interesting thing was an all out attack on the government for its incompetence in relation to the UK's strategic gas & oil supplies.
According to Digby, Labour and Brown in particular had put the UK at risk by refusing to rebuild and extend our aging and obsolete gas and oil storage capabilities, thereby putting our economic well-being and perhaps our very independence at risk. He predicted that at some point in the next 2 to 5 years, as a result of government incompetence "the lights will start to go out" all over the UK. At the time I thought he was just playing to the crowd, now I'm not so sure...
Serf said...
Its a good job that the planet is warming up isn't it.
Trouble is, it isn't
In rural Devon we don’t have main line gas, but propane has seen a commensurate rise in price. It’s back to wood burning stoves for us.
Sounds like your friend is behind with their payments or has been misunderestimated by the utility.
And sounds like Digby the outsize dog was just holding forth at the bar. Still Dorries want to rebuild the coal industry so just investing more in gas handling facilities is minor.
Windsor Tripehound said...
"Serf said...
Its a good job that the planet is warming up isn't it.
Trouble is, it isn't"
Although we appear to be in a short phase where there has been no real increase the long-term trend is an increase in temperature.
It's happening in N.Ireland too. I bought 500 gallons of oil at the weekend which cost me £534, that is a very steep rise from the last lot of 500 I bought at £250, food has jumped considerably, transport costs going up and up and up......
Lets hope the DUP-ers bring back some sweetners on Wednesday from the deal they didn't do over the 42 days saga.
Big week this week, with the Lisbon treaty vote on Thursday, (some votes already being cast this morning!)
So, what will the boy Cameron and his pals do about this once they're in power?
Rises of this scale would, on their own, guarantee the tories a win at the next election so it'd be nice to know what they'd do.
Massive subsidies for nuclear? Grants for insulation and alternative energy? I'm sure there's lots that could be done.
If Jones is right, Brown deserves to be prosecuted. What can we get him on?
... and for the Labour party.
I've worked in or with the oil industry for 23 years. There is an irritating consequence of the world's having finally noticed how important energy is. This is that every tosser now has a view on the energy price. The stridency at which these views are shared is closely correlated to the pig-ignorance of the view. Even that gormless over-forty-fatty bimbo off the Girl (sic) With A One Track Mind blog has a view on the oil price, as if anyone cares.
Here are some often-overlooked facts.
1/ The high price of oil is neither the fault of the Arabs, nor is it within their means to lower it. And if they could, they shouldn't. Petrol is expensive not because crude oil is $135 a barrel, but because there is $250 a barrel of UK government tax on it. OPEC should not reduce the price of their one and only export just so western governments can continue to charge huge duty on the stuff.
2/ Colonel Gadaffi has been a wise and beneficent ruler of Libya. Before he came to power, Libyans lived in tents and shat in their hands. Today they live in air-conditioned homes with good utilities, receive free education and healthcare, have at least one well-regarded university and they haven't squandered their oil money on vanity projects or on threatening their neighbours militarily.
3/ Motorists obviously think petrol is worth the price, because they're still paying it. If they didn't, they wouldn't.
4/ Price is a valuable signal. It tells us that it's worth investing in developing oil and alternatives to it. Artificial forced reductions in the price will prevent this, and ensure a bigger problem in the future. Be glad that oil is $135 a barrel.
5/ Britain uses 90 million tonnes of oil products a year. A third is diesel. You can grow diesel, right? Wrong. The arable area of the UK is about 16 million acres. The yield of diesel per acre is about half a tonne. So if we stopped growing food on those arable farms, and grew diesel instead, we'd only grow 8 million tonnes a year or a bare quarter of our annual diesel demand. The average UK farm is 160 acres, so the average diesel farmer could look forward to about £40,000 a year, i.e. quite a lot less than he could earn by growing wheat and that's before all the CAP handouts.
6/ When road fuel was desulphurised in the 1990s due to environmental concerns, crop failure followed all over Europe, because without the sulphur in our healthy life-giving acid rain, most crops didn’t grow properly. The sulphur taken out of oil at refineries is now pelletised, shipped to petrochemical plants, turned into fertiliser and then trucked out to farms to be sprayed onto the fields, a process that used to happen naturally through rainfall. Funnily enough, the worst-affected crop is…oilseed rape. You have to laugh.
7/ Coal to liquids looks quite good on paper for the UK. One coal to liquids plant producing 5 million tonnes of products a year would cost about $5 billion to build. To supply one-third of UK demand with coal-derived products would thus cost about £750 million a year, assuming a 20-year lifespan for the 6 plants you'd need. Of course, in this country, it would probably take you 20 years just to get the planning permission, and you'd also need about a billion tonnes of coal over that period. I have no idea how much coal the UK has left, but for CTL purposes, the crummier the quality of the coal, the better.
8/ Still more unfortunately, Sasol's CTL plant in South Africa is the biggest point CO2 emitter in the world. Energy economy, nice warm green feeling: pick one.
9/ There are lies, damned lies, and oil reserves statistics. The conservative view is that we've used about a trillion barrels and there are about another trillion left. However, there may be seven trillion left. It depends what you count, and how.
The Tories and that recent piece of government research are right about this. Microgeneration is the way to go. Minimise use of the stuff, basically.
If your friend is that far behind with their payments they have not had their eye on the ball.
I buy LPG and on viewing my statement realised I need to increase my payments by 25%, though this is a pre emptive move rather than a necessary one.
But what does this mean?
It means that ordinary folks are paying more for the necessities. For some it will mean they have one holiday a year less and for others it will be more serious - including mortgage arrears.
Anybody who is not acutely aware that there is going to be a bit reckoning this year has their head up their bum.
It's going to be massive, the merde is hitting the ventilateur and its going to be ugly.
We need a revolution, a proper one, with strikes and marches and protests. We want Gordon Brown and the Labour liars out and we want it now.
High energy prices are here to stay.
No doubt Gordon's solution will be to endlessly up the winter fuel alloance.
We never had central heating when I was a lad and we survived!
But there again we didn't lounge around dressed like we were on holiday in Spain.
One word - Thermals!!!!!
I have a wood burner and a solar panel for my hot water (yes it does work in the winter!)
In the late 50's I worked for the National Coal Board at that time it was estimated there was 500 years of coal to be extracted at the rate then,all the gas in this country was produced from coal,their were no shortages.Why could this method of gas extraction.Why could this not be reintroduced we would not then be dependant on anyone other than ourselves.
Lesson: Steer clear of those direct debits, the untility companies can say what they like, they're always ahead.
In the case you cite, the first thing we should note is the DD payment is bumped up: the process should be that the projected increases are advised and the consumer given the chance to balance the account by reducing usage.
it's robbery but what can we expect from privatised suppliers. Nationalise the lot I say :-)
Anonymous said...
"Although we appear to be in a short phase where there has been no real increase the long-term trend is an increase in temperature."
Tosh.
We need a winfall tax on oil and gs companies like they do under the democrat candidates.
@Dirty Trot:
You don't understand this market thing do you. The last thing you want is a windfall tax.
The price of oil has gone up because demand has risen faster than supply. There is more oil out there, but it is more expensive to get out of the ground, so the oil companies need to use their profits to invest in the more expensive new sources of oil. If you tax their profits then all that happens is they can develop fewer new oil fields so the price of oil goes even higher.
Just to show you lefties don't understand how the world works, explain this: our government taxes fuel at a pretty high rate, ostensibly to reduce demand for fuel, and this has some effect because the use of liquid fossil fuels has reduced in OECD countries.
The Chinese, the Indians and many other developing nations take a different view and subsidise fossil fuels, effectively encouraging their use. In fact the subsidies in China and India are probably twice as much as the taxes that the UK government charges.
If that isn't bizarre enough, we pay £1 billion in aid to India.
oh indeed, I'm sure pensioners can look forward to their usual £10 winter heating allowance from the Tories again....
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