There is no gas prices rises crisis
If you read enough news it’s easy to develop the idea that everything is terrible and only getting worse. Predictions of doom from climate change are likely to be salted with a few tragic events, enough to short circuit rationality:
Yesterday X people were killed by floods in Place Y. Two weeks ago tornadoes swept across Place Z, causing catastrophic damage. This comes hot on the heels of an intense drought in Place A that has caused devastating food shortages. We are seeing the climate crisis deepen in real time, said Talking Ass B. The time for action is now. There is no longer any excuse for delay.
So I hesitate to use the present flood of bad news about energy as definitive evidence of an energy crisis. But still.
Previously I noted the Orwellian response to what was obviously a gas shortage, where high prices were blamed on over-reliance on gas instead. However, things have only got worse since then. When I wrote that note, the price of gas had come down from (what we hoped was the peak) £2.94 per therm down to about £2.34. On December 21 the price hit £4.52 per therm, though as I write it has fallen back to about £4. (The price a year ago was about £0.50 per therm.)
Here’s what I got today when searching “energy crisis” on Google:
And the front page of the FT (clipped from the BBC’s front pages item):
In case you can’t read the smudgy small print, it speaks of energy bills reaching £2000 per year. And that is clearly not a sensationalist publication talking: it’s the pink grapefruit itself, a paper only consumed by really rather serious types, including bunker-dwellers (see featured image).
Bloomberg said this, in between demands for money (my bold):
Cold-stricken Europe is drawing a flotilla of U.S. liquefied natural gas cargoes amid an energy crisis that has sent gas prices to record levels. Facing a winter shortage and little relief from the continent’s main supplier Russia, natural gas in Northwest Europe is trading for about $57.54 per million British thermal units, up almost a third from a week earlier. That’s roughly $24 higher than Asian prices and more than 14 times higher than gas being sold on U.S. benchmark Henry Hub.
What does our government have to say? Kwasi Kwarteng (Secretary of State for Business, Energy and Industrial Strategy) has retreated to his bunker, presumably clutching a fifty-year-old copy of the FT: the only recent mention of him I can find on a news search is a quite facile advertorial here:
Mr Kwarteng does not believe that the shift to net zero needs to result in higher prices for consumers. ‘No one is suggesting now that coal would be a cheaper way of generating power.’
No-one is allowed to suggest that, I believe. We can suggest it here, but Secretaries of State won’t hear us. That is more or less the same thing.
The success of wind and solar, however, has compromised investment in tidal power – a form of renewable energy where the outputs are more predictable than wind or solar, and which could add resilience to electricity networks. The government was put off investing in tidal power because of initial estimated costs of up to £200 per MWh, said Mr Kwarteng. But then little more than a decade ago wind power cost £150 per MWh. It now costs more like £40 per MWh, thanks to economies of scale.
If this presages a pivot into tidal, we’re all doomed. (Or is this the Spectator getting paid to publish something so idiotic that they are able to make some sort of ironic point?)
Actually, hold the phones. I’ve found another mention of the Secretary of State in recent news:
Kwarteng urged to use powers to adjust ‘out of date’ transmission charges
Aha, they want him to charge renewables for accessing the grid! Now we’re talking. Hang on, wait. No they don’t.
Concerns about transmission charging and its potential to act as a barrier to Scottish green energy projects have been a dime a dozen recently.
They want remote wind farms to have cheaper access to the grid. The obvious answer to an energy crisis, I’d say.
The system was drawn up 30 years ago with the aim of encouraging developers to build power plants near to where demand is at its greatest.
Yes, what we need is a new system encouraging developers to build power plants far away and run a giant extension lead out to them at our expense.
The BBC finally noticed the crisis here.
Emma Pinchbeck, head of trade body UKEnergy, said rising prices were now starting to hurt the economy. The government said it had measures to protect consumers, but she told the BBC tax cuts and green levies [sic] would help.
I think Pinchbeck here is referring to switching green levies from electricity to gas, which won’t help people with gas boilers (i.e. most of us). The BBC seems to think she is asking for more green levies. My view is that the green levies are one part of the problem and need to be excised altogether.
The BBC also asks the question,
There has been a worldwide squeeze on gas and energy supplies.
As a result, wholesale energy prices rose sharply and, in recent weeks, have hit their highest levels of 2021.
- A cold winter in Europe last year put pressure on supplies and, as a result, stored gas supplies were low
- A relatively windless summer meant it was difficult to replenish those supplies
- There’s been increased demand from Asia – especially China – for liquefied natural gas.
There are a number of technical and geopolitical issues at play as well, which means many countries across Europe are grappling with the same problems.
No mention there that the US’s natural gas costs a tenth as much as ours. Nor that LNG tankers are chugging across the Atlantic, their delighted owners having struck ludicrous deals to supply us with a fuel we are sitting on a massive stockpile of.
Let me suggest to the BBC that countries that are dependent on large imports of gas are the ones suffering in this crisis, while net exporters and self-sufficient countries are not. We were once in the latter group, now, thanks to government stupidity, green infestations in the Lamson tubes, etc, we are firmly in the former group.
We have a choice: we can either frack for our own gas, or keeping banging our heads against the wall hoping our headache will go away. I’m betting on the latter.
Featured image: A copy of the FT found in Burlington bunker, via the BBC. An archived version of a fascinating web page about the bunker is here.