Will it turn out to be Boris Johnson’s Jim Callaghan moment? Briefing reporters on his plane to the US on Sunday, the current PM tried to play down the energy crisis, saying:
‘It’s like everybody going back to put the kettle on at the end of a TV programme, you’re seeing huge stresses on the world supply systems.’
The gas price spike would be over just as soon as it occurred, he implied, and was caused by nothing more than the global economy rebounding after many months on the Covid couch.
It all had faint overtones of the moment during the Winter of Discontent 42 years ago when the then PM, catching a plane taking him to Guadeloupe for a summit, retorted to reporters at Heathrow:
The idea that the energy crisis is just a temporary blip has been questioned this morning by Jonathan Brearley, chief executive of Ofgem
‘I promise if you look at it from the outside, I don’t think other people in the world would share the view that there is mounting chaos’
These comments were paraphrased in the immortal Sun headline ‘Crisis, what crisis?”
The idea that the energy crisis is just a temporary blip has been questioned this morning by Jonathan Brearley, chief executive of Ofgem, appearing before the Business, Energy and Industrial Strategy Select Committee of MPs.
Asked whether the current surge in prices was just a temporary spike he said:
‘I think when you look at commodity markets as a whole, when you see a spike like this, history has suggested that those spikes do go away. All I say right now is that you know that’s not something we Ofgem would rely on simply because we have to plan for a whole range of scenarios.’
He went on to suggest that the five energy suppliers which have already gone bust as a result of the wholesale gas price peaking at six times its level last year are just the beginning. Wholesale prices rose by 70 per cent in August alone.
‘Have a look at the change in the gas price,’ he said. ‘It really is something that we don’t think we’ve seen before at this pace….we’ve already seen hundreds of thousands of customers affected, that may well go well above that.’
Those customers – along with everyone else, eventually, when they come off fixed-price deals – face a sharp upwards jolt in the costs of heating their homes. This comes at a time when Universal Credit is being cut back by £20 to its pre-pandemic level and other prices are rising sharply, too. Last month, CPI inflation rocketed up from 2.1 per cent to three per cent.
For some people, the problems in the energy market will come as justification for pushing Britain to renewables much quicker – although the energy crisis in Britain has been compounded by low wind speeds, and the failure of a burgeoning wind energy sector to find a way of storing energy when the wind is blowing so that it can be used when the country is becalmed.
For many others, though, it will raise the question as to whether the current crisis could have been avoided had the government done more to encourage of UK shale gas industry – a sector which has been allowed more or less to die a death as a result of environmental protests.
Those who supported fracking in Britain argued that whatever the merits of a long-term switch to renewables, the country would remain reliant on gas for decades to come. The current crisis appears to confirm those arguments.
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