UK must double down on renewables as wars drive up energy costs, experts say
Fossil fuel price surge after US-Israeli attacks on Iran prompts calls to end dependence on ‘volatile’ energy source
Should we have cheaper but volatile or more expensive and less volatile?
It’s possible to make philosophic arguments for both or either. Myself I think I’d prefer cheaper yet volatile. I also think most people would if only the choie were explained to them in this manner. Which, of course, it never is.
‘Green’ energy is volatile, not perhaps in price so much as availability. I want 24/7/365 electricity availability, which won’t be our future with Mad Ed in charge of it.
Exactly. Maybe a point will come that battery storage is cheap enough to make it work, but it isn’t there yet and when that happens is far from determined.
The only way to get that at the moment is the synthetic fuels route. Put solar into southern Europe, North Africa, Arizona and convert it to kerosene and ship it. Which would still be more expensive than the current price of fuel.
That headline should be ‘UK must give up its’ insane dash for net zero and start digging up the oil and gas we have in OUR territory to ensure we are free from the effects of foreign wars’.
And before anyone mentions ‘ah, but gas and oil are traded on the world market’, petrol in Iran is 36p per litre.
A pleasure to see a sensible solution to this problem.
Now if only the Oz government could have the brains to do it.
THIS.
Petrol in the UK is also 36p per litre – and then another 100p in tax.
Like many oil-producing countries, Iran subsidises prices at the fuel pump. One of those policies that’s hard to change once you set it, because people start relying on it and riot if you remove the subsidy (see Nigeria for the same phenomenon).
Economists will tell you it’s an awful policy economically, by distorting prices you end up with encourage people to use more fuel than is rational – so more traffic/congestion, more gas-guzzling vehicles, also smuggling of fuel to neighbouring countries where the pump price is higher.
If the authorities do want to subsisidise the locals using the oil wealth, they’d be much better to do it using direct cash transfers. More universal, less distorting, less wasteful.
Oil really is traded globally, so has a global price, and you can’t look at Iranian pump prices without realising they’ve got a subsidy policy. And for the reverse reason, comparing to UK pump prices is silly because more than half of it is tax: https://www.racfoundation.org/data/percentage-uk-pump-price-which-is-tax-page
Natural gas is not traded globally and does not have a global price. Pipeline networks are key, and two disconnected networks can sustain quite different prices. LNG is helping limit how big those price differences can be, but there’s a big difference in capacity between pipe networks and LNG tankers. Also there aren’t that many terminals.
Back when I used to write OpEds in the Iranian press that’s what I’d tell ’em too. Stop subsidies to things and give money to people. They even listened for a bit (well, some of ’em did).
AI tells me the Iranian government “spends $100 billion in subsidies, mostly on fuel”.
Does the Iranian government give the oil companies money from the taxpayer? If so, that’s a subsidy. Do they give the Iranians money? You say they don’t (but should), so that isn’t a subsidy either.
If they don’t charge the consumers or oil companies vast amount of taxes as they do here, that isn’t a subsidy it’s a tax break.
Anyone know?
They pump up the crde, sell it abroad. Then they use good cash money to buy petrol on the international markets – don’t have enough refining capacity – then sell it to consumers at less than it cost to buy. Something similar with gas.
Thanks Tim. So where do they get the good cash money from? The proles? Or the $1.7 billion Barry sent over?
The Chinky-chonks. That’s where they sell most of it.
Did you read the first bit: “They pump up the cr[u]de, sell it abroad.” That sale is a cash transaction.
They sell crude at whatever it is per barrel then buy back refined petrol at whatever it is per gallon. Seeing as the first bit (selling) is cheaper than the second bit (buying) where does the extra money come from?
They sell far more crude on the export market than they buy back refined stuff for domestic use – remember they’re a big net exporter.
I doubt they are buying back all the crude they sell as refined petrol so they don’t need to find extra cash. In fact they will most probably have cash to spare.
So if America is the Great Satan, and Britain (or sometimes Israel) is the Little Satan, is Tim Chubby Satan?
But then you have to consider how to send the money to the people you want to send it to, and not to the people you don’t.
I suspect many of the ones with vehicles that need petrol are supporters of the regime, or more so than ones who don’t.
By the way, there’s no need to pretend that oil producers can magically sustain a far lower price of an easily traded and transported commodity compared to other countries around them. There’s a far simpler argument for producing your own oil.
If you’re worried about the volatility of oil prices then producing (more of) your own oil is a good hedge. If all you can do is reduce your net imports, then a spike in oil prices is at least less harmful. If you can become a net exporter of oil, then your country could even benefit overall from higher global oil prices… with the sting in the tail that a stronger currency can hurt your other exporters, so-called “Dutch disease”. (As Tim has explained before, this is why Norway’a petrochemical income is stuffed into a sovereign wealth fund instead of letting it loose in the wider economy.) https://en.wikipedia.org/wiki/Dutch_disease
Refusing to exploit your own oil reserves is the opposite of a hedge – it is exposing you to more risk. In principle this isn’t just economic risk but geostrategic, though in practice OPEC isn’t the threat it was in the 1970s.
Either way, oil prices going up is still going to hurt consumers and energy-intensively industries (unless you commit to wasteful Iranian-style subsidy policies). But if you’ve got some local oil producers too, then you’ve got at least some winners to offset against your losers.
Anon, “Refusing to exploit your own oil reserves is the opposite of a hedge – it is exposing you to more risk”.
Any chance you could have a word with Mad Milliband……
When demand rises you increase supply. This is not possible when 1. a major local source of supply is rendered unavailable by government policy and regulation, and 2. its preferred source of supply uses an energy source over which no-one has any control.
Nice dunkelflaute we’re having at the moment.
https://gridwatch.co.uk/
Volatile, yes. Maybe not acshually “cheaper” – else why the subsidies?
Which one are you calling volatile & which less volatile? Renewables are extremely volatile in the short term. No sun or wind – instant – no energy. Fossil fuels more volatile prices in the long term but you can pay more to preserve supply.
wars drive up energy costs Maybe. They certainly haven’t driven up energy costs in the present. Energy being used today was paid for before the war. If user-prices are rising it’s in anticipation of higher FF prices. Happened before. And turned out to be short term or incorrect.
As for doubling down on renewables. Lead time for that one is in decades. Anyone want to predict energy prices for 2045?
“Fossil fuels more volatile prices in the long term”
Not really. Consider the price for electricity from various sources in Britain over the last few years.
Or is it less volatile because it keeps going up, and so it’s more predictable?
Renewables cheaper is one of the funniest things I’ve ever heard you say.
The word “volatile” was being used to refer to fossil fuels (at least in the piece being quoted). So presumably when Tim said “cheaper but volatile” he wasn’t referring to renewables, I think you’ve read this backwards.
“Myself I think I’d prefer cheaper yet volatile.”
This is fine until your heat stops working in the middle of the winter.
But then maybe that’s why you’re currently not in England. Are you still in the winterkill zone?
That’s what the UK and Leftponders get now with expensive + volatile. Texas last winter, anyone?
You can store oil and gas. The international price may be volatile but supply to consumers needn’t be. Wind and sun?
Speaking of volatility, how about volatility of actually being able to heat your flat and turn on the lights?
Traditional energy sources may fluctuate in cost, but they work, and Unreliables only seem cheaper because of gov’t subsidies.
Indeed. These people insist on discussing the theoretical. Whereas reality continues to be somewhat different. I’d suggest; this is what you get in a world run by university grads. Whatever happened to all the practical people?.
Waiting for our version of Pol Pot to lead us in a revolution to rise up and slaughter all the graduates. Trouble is we’re too busy actually making sh*t work.
My experience, the guy makes things work is the one in the overalls with a spanner. (This is not a reference to TTK)
An unforgettable experience with the university educated. Care of my business partner’s wish to provide employment for an acquaintance’s son during the vacation. Lad wasn’t much good for labouring. Fit enough through being keen on sport. But FA endurance. Half an hour of shifting shit, he was fainting on his feet. So gave him a task I thought he could manage. Go through the building nailing down loose floorboards had been taken up when the services were run. Showed him how to do it. Nails in adjoining boards will indicate where the joists are. If you’re unsure, run a hacksaw blade along the gap. Nails go in about 3/4 inch from both edges. Gave him a box of 2 1/2″ cuts, a hammer & left him to it. Following day we livened up the water & electric. Or tried to. Contact breakers wouldn’t set. Then the water started pouring through the ceilings.
Our clever lad had decided that putting a single nail through center of the board was quicker an easier. But the center is where the wiring & pipe runs are notched into the joists. Finding & repairing breaks & punctures, re-plastering & repainting ceilings added about £10k & a week to the job.
Now the country’s being run by people like this. People who think they’re clever & know better because they have a piece of paper says they are. Given to them by people as useless.
Th example of Sri Lanka (whose economy was stiffed by separation from India to whom it supplied university education (a large minority of the Raj’s total) and the subsequent more-than-doubling of Sri Lankans going to university resulting in mass unemployment of graduates and civil war) suggests that the British Pol Pot could be leading an army of Blair-era graduates to smother the workers in paper.
UK must double down on renewables
Like you’ve got the money for such nonsense.
This CO2 nonsense is doing my head in.
We’re told that a bit more trace gas in the atmosphere leads to ocean acidification.
So we must do carbon capture and storage to reduce atmospheric CO2.
Which will be replaced by outgassing CO2 from the oceans.
Meanwhile, we could – at eye watering expense – make carbon steel (4 billion tons a year) without coke.
We couldn’t make cement (9 billion tons) without outgassing CO2.
We couldn’t make any fertisliser or plastics at all without oil (nearly a billion tons a year).
Declaring CO2 as the bogeyman is the way to destroy modern civilisation.
Is that the point?
Yes. CO2 works by re-emitting specific infra-red wavelengths, but there’s a finite supply of these, and NASA satellite data reveals that our present CO2 levels are already absorbing almost all of the available infra-red. It requires exponentially more CO2 to achieve linear rises in AGT, which the IPCC concedes. We just can’t produce enough. Meanwhile, the Earth greens thanks to CO2.
philip, “leads to ocean acidification”.
The oceans are alkaline so adding ‘acid’ will not make them acidic, just less alkaline, ie: nearer to fresh water, but as that doesn’t sound scary they use the weasel word ‘acidification’ to imply they are turning into sulphuric acid or something.
Fresh water is NOT pH neutral.
We couldn’t make cement (9 billion tons) without outgassing CO2.
Part of the curing process of cement is it absorbs CO2 from the air. It’s a multi-decade process but eventually much of the emitted CO2 ends up back where it started. Calcium hydroxide>limestone.
The Grauniad is lying as usual. My utility supplier actually tells me what price it is charging and electricity is FOUR times the price of gas (both measured in BTUs). CCGT are more than 50% efficient – so the price of electricity generated from gas is *less than half* the average price of electricity. If we switched overnight to 100% of electricity from gas electricity prices would halve.
Miliband’s DESNZ claims Electricity from Gas prices are higher than Electricity from Wind by including a tax that he created solely to make gas appear uneconomic *and* ignoring the cost of keeping a dozen CCGT and OCGT plants continually on standby to rescue the Grid every time the wind drops or a windmill breaks down (when I, occasionally, drive a significant distance I pass windfarms and notice that – more often than not – one or two windmills are out of action). An honest comparison would expose his lies..
…and that’s why there won’t be one.
Home produced gas would be loss volatile than renewables.
There’s a big supply in Ely.
It would be a lot less volatile if we had our own direct supply.
You know, the stuff under our island and off the coast.
“Only in Britiain could we live on an island built out of coal surrounded by seas full of fish, and have a shortage of both”.
Under socialism you can have a shortage of sand in Saudi Arabia.
Fluctuating hydrocarbon prices are bad.
Therefore we should permanently lock ourselves into unaffordably expensive energy that ensures prices are consistently in the stratosphere and we get guaranteed economic failure and poverty instead.
Ed Miliband is very smart.
Its gone up 20 cents where I live. From $3.00 to $3.20. Its merely back to still lower than the peak under the Biden Administration. I think I can handle it.
Kindly stop gloating.
“UK must double down on renewables as the middle class isn’t going broke quickly enough.”
FIFY