Energy

The debate about energy in the UK has largely concentrated on just how high prices will go. This is understandable given how seismic the October and January increases in the energy price cap are likely to be. But today’s announcement from Norway that it will prioritise refilling domestic reservoirs over exporting hydropower to countries like the UK is a reminder that supply may soon become an issue too. In a crisis, borders reassert themselves as Covid showed. What happened with PPE and medical supplies during the pandemic may well happen with energy this winter. This is a concern for the UK given that it imports large quantities of energy during the

‘What’s worse, they’re paying the profits to shareholders,’ said a grey-haired woman ahead of me in the Co-op queue. ‘Bloody shareholders,’ her friend of similar age and class spat back. I guessed they were talking about Centrica, parent of British Gas, which at a time when domestic energy bills are rising 23 times faster than wages (as Frances O’Grady of the TUC puts it) has announced half-year operating profits of £1.3 billion, up from £262 million last year – and the restoration of a penny-per-share interim dividend after a three-year gap. Both ladies looked likely to be beneficiaries of pensions nourished by dividends from the likes of Centrica, Shell and

Have we reached the endgame of Vladimir Putin’s energy war against the West, the point at which he turns off the gas for good? This afternoon, Gazprom announced that from Wednesday morning it will cut the quantity of gas flowing through the Nord Stream 1 pipeline to Germany to 33 cubic metres per day. This will halve the current flow of 67 million cubic metres and is just 20 per cent of the 167 million cubic metres which flowed through the pipeline before the Ukraine invasion. Ostensibly, the cut is for reasons of ‘maintenance’. That is unlikely to wash. Nord Stream 1 relies on a compressor station powered by six

For now, Berlin can breathe a sigh of relief: after a ten-day shutdown for maintenance, the Nord Stream 1 pipeline is back online. Russia is once again heating German homes, fuelling German industry, and using German money to finance its war in Ukraine. But this happy exchange may not continue; the pipeline is still operating at just 40 per cent of its usual capacity, and Vladimir Putin is warning this could fall to 20 per cent next week. With Germany’s gas reserves just 65 per cent full – thanks in part to state-owned Russian energy company Gazprom’s curious oversight in maintaining them last year – and plans to refill it

Stock markets are tumbling, but given the tide of economic news, that’s hardly surprising. The S&P 500 index dived into bear market territory – 20 per cent down since January – after a rise in US inflation for May. Our own FTSE indices reacted badly to an unexpected 0.3 per cent drop in UK GDP for April. Interest rate rises predicted on both sides of the pond this week will make investors jumpier still. So expect further falls in markets that have been driven by weight of cheap money to stay unnaturally high despite an increasingly bleak backdrop. And wait for the turn. When might that be? When investors think

After the Jubilee dream of a lovely lost Britain, back to reality with a face-slap: the reality of the £8 pint of beer, the £8-plus gallon of diesel and the death throes of a Downing Street regime that has no discernible answers to the cost-of-living crisis. All of which takes me back to some questions I’ve been pondering for a while: whether the UK faces higher inflation and a deeper downturn than the rest of the western world, if so why, and who we should blame. By way of caveat, let’s recall the shifting pattern of Covid statistics over time: just because the UK topped April’s G7 inflation table –

A slip of the tongue George W. Bush condemned a political system where one man could wage a ‘brutal and unjustified invasion of Iraq’ before correcting himself and saying ‘Ukraine’. Some other Freudian slips by US politicians: – In the 2012 US election Senator John McCain, who had been the Republican candidate four years earlier, made a speech in which he attempted to look forward to a Mitt Romney presidency, but somehow managed instead to say: ‘I am confident that with the leadership and the backing of the American people, President Obama will turn this country around.’ – At another event in the same election, Romney himself introduced his running

The Financial Times story on Rishi Sunak looking at a possible windfall tax on energy firms captures how difficult such a tax is for any government, especially a Tory one. Because it begs questions why, when electricity suppliers suffered unsustainable losses in autumn and winter, when under the price cap they suffered huge and unsustainable losses – what you might call a reverse windfall – they were allowed to go bust. If you believe in capitalism and competition, you believe in swings and roundabouts: windfall profits in good times are the obverse of extreme losses in the bad. Kwasi Kwarteng repeated that mantra as failing electricity suppliers would not be

In principle, the UK’s energy price cap is supposed to provide a buffer for consumers who might otherwise see their energy bills go through the roof. But governments can’t control international energy prices: a lesson that has been learned the hard way over the past six months, as dozens of energy companies have gone bust, unable to raise prices for customers to reflect increasing wholesale costs. Meanwhile the cap has not stopped bills from skyrocketing: Ofgem’s last price cap went up by 54 per cent, taking the total cost for an average household to just under £2,000 per year. Still, if there were any silver lining to this distortive policy

BP’s ‘underlying’ first-quarter profit of $6.2 billion, compared with $2.6 billion in the first quarter of 2021, was a direct reflection of the surge in global energy prices. Coming 48 hours before polling day, it also looked like a gift-wrapped on-time delivery for Sir Keir Starmer and his claim that a windfall tax on ‘excess’ profits of North Sea oil and gas extractors would knock £600 off the energy bills of ‘those who need it most’. Perhaps anticipating the BP announcement, Rishi Sunak last week seemed to trim his opposition to a windfall tax, telling Mumsnet ‘of course that’s something I would look at’ if energy companies fail to invest