The only certainty in the energy field is that prices will continue to go up
Already about 6m are living in what is described as fuel poverty – that is, more than 10 per cent of their income is taken by energy bills – and British industry regularly warns that intensive energy users are being priced out of the country.
Why is this happening when Britain is deeply in debt with a £150bn budget deficit and the Government is fighting rising unemployment and trying to promote growth?
There is no simple answer. Energy use has fallen from its peak because of the economic slowdown but international prices for fossil fuels remain high. They do, of course, fluctuate – e.g. gas through reduced economic activity and new supplies of ‘unconventional’ gas – but the longer term prospect is rising prices for all fossil fuels. Some would argue the current average energy bill, £1,300, is partly the result of profiteering by energy suppliers, but it should be pointed out that gas and electricity are subject to regulation by Ofgem.
Another – and growing – reason is the use of energy policy to combat global warming. At present, this probably – and again there is no independent, authoritative figure – adds £100 to the average household heating and lighting bill, but it is projected to rise substantially in future.
Political consensus
This is because of the remarkable political consensus in the UK on the way to combat global warming – by discouraging fossil fuel consumption, or de-carbonising the economy, as it is called. The Government could do this and obtain greater security of supply at competitive cost by urgently re-developing nuclear power, which emits next to no carbon dioxide. It has administratively facilitated nuclear’s renewal while decreeing that no new nuclear power stations will be built unless the unsubsidised private investor decides to invest his money in this way.
At the same time it requires the consumer heavily to subsidise renewable sources of energy in a variety of ways – through direct supplements to the price paid for “green” power, preferential use of “clean” energy and a carbon tax which could also incidentally advantage nuclear.
Download the full Energy Prices PDF.