Energy Prices 2 - further action
Nobody can afford to be complacent about the enormous amount of pain which the extraordinary fuel costs will cause, particularly to the most vulnerable members of our society.
The government has already announced £43 billion in help with more this week (see previous post)
But it is clear that in the face of these horrendous energy price rises more will need to be done.
In ten days' time we will have a new Prime Minister. There are two excellent candidates standing.
I hope and believe that neither will be too proud to accept and act on some of the better ideas put forward by the other.
Both Rishi Sunak's proposal for a temporary removal of VAT on energy and the proposal from Liz Truss to suspend the green taxes - hardly needed now when increased energy prices have already given everyone a far stronger incentive to save energy than the green taxes ever did - are sensible proposals which should be adopted by whichever wins.
We also need to do more in both the long and short term and do whatever it takes to help everyone, especially the most vulnerable, get through this.
Comments
I know that sort of thinking 15 years or so ago is part of the reason we are where we are. But as the case for "its all Putins fault" really falls apart under any scrutiny, What are your thoughts on the cause of the energy crisis and what do you think would be a good strategy for a long term solution?
There are a large number of reasons why prices started rising last year - demand recovering faster than supply following COVID, green taxes supported by all political parties, inadequate efforts to get more homes insulated, the fact that we have taken far too long to build more nuclear power generation all being part of this. For a longer term solution, all of these need to be addressed.
Without the war, these factors would still have meant that energy prices were high enough to be a problem. But without the war, the impact of that on exports by and through Russia and Ukraine, including Putin using reductions of energy supply, we would not be seeing the sort of increase in three figure percentages in world gas prices from an already high base which drove yesterday's announcement.
In the long term, of course, Putin's policies are incredibly self-defeating because governments, companies, and firms have all just been handed a massive incentive to find alternatives which reduce or replace their dependence on imported gas.
New nuclear, insulation and other ways to improve energy efficiency, more renewables - all of these are important parts of the long term solution.
In the meantime whoever is in power will have no political alternative but to reach for short term solutions to help people through this winter.
Yes, politicians will go for the band-aid solution. That is because voters will give them no choice. But with a situation this dire I would not argue that such solutions are wrong, as long as longer-term ones are supported too.
Renewables are great, but they are intermittent. Meaning something else has to be on standby to fill the gaps, when that something else is gas its made even more expensive. The push for net zero is fine, but without new nuclear it is a none starter.
So we were headed to where we are with or with out Putin, he really just brought the inevitable forwards. I agree with you on your long termsolution, insulation, new power stations for intermittency and more renewables, yes. As for the short term eliminating the 5% vat will help, but its going to take a lot more than that. "Fuel poverty" is defined as 'when more than 10% of your income is spent on energy bills'. Currently they are almost 75% of the state pension. Also its worth noting that no one really qualifies for any help until they are destitute so have no savings left, you have to burn though your savings first. This really will wipe out a lot of retired people, millions will become state dependent despite saving for retirement all those years.
The bad thing about what Putin has done, apart from all the people he is murdering on the Ukrainian side and all the young men on his own side for whose deaths he is to blame, is that he has sent what would already have been painfully high costs up to stratospheric levels.
The silver lining to an extremely horrible cloud is that we now have incredibly strong incentives, even stronger than we had before, to do what we ought to have been doing anyway.