There is no point nationalising the energy sector

Household energy bills are rising very rapidly, and are now expected to be over £4,000 per year by October and possibly over £5,000 per year by early 2023. Many commentators, including most notably Gordon Brown, are saying that we should now nationalise the energy companies and bring bills down. Would that help?

It’s rather unclear what is being proposed by those that advocate nationalisation. We can think of the energy sector as having three layers. First, there are those that create or collect energy. These are firms that run wind farms, hydroelectric plants, solar panels or nuclear power stations, or mine coal or drill for oil or gas. At this layer there are many, many firms operating in a highly competitive international market.

It is at this layer that prices have skyrocketed. The removal of Russian gas supply at a point at which aggregate energy supply was already stretched because of adjustments to green energy (with non-green energy sources removed or running down but many big green energy projects still a few years from completion) has meant there is not enough energy to go around at previous prices.