Why Boris can’t blame rising energy prices on Ukraine

Are you ready to take cold showers to do your bit for the war effort? Protestors in Berlin have been holding up placards suggesting they’d sooner do so than use Russia’s gas. Boris Johnson has called on the British public to make similar sacrifices, solemnly telling us that we need to drop cheap Russian energy and ‘accept that such a move will be painful’. The government will spend billions to help ease that pain, he says, but ‘none of us can afford to carry on like this for long’.

On the surface, it sounds like the start of an honest conversation: telling voters that the cost of living squeeze we’re experiencing now has only just begun. Or might the PM be getting ready to blame Russia’s war against Ukraine for price rises that were going to happen anyway?

Just as it was difficult to disentangle the economic impact of Brexit and Covid, it’s now tough to distinguish which price hikes are down to Putin’s war and which are the inevitable economic consequences of the past two years. Oil prices might make for a straightforward case: the fluctuation of the price of a barrel, hitting a record peak of $130, is directly linked to the US’s ban on Russian oil and much of the world’s decision not to buy Urals. But little else is easy to explain.

Managing without Russia’s energy supplies will indeed cost Germany’s economy dearly: it imported a staggering 32 per cent of its gas from Russia in December (compared to Britain’s 3 per cent) and wants to reduce that by two-thirds over the next year. That will involve big sacrifices.

But Britain’s energy prices were skyrocketing before any economic sanctions were issued. The energy crunch, exacerbated by global economies coming back online after lockdowns, saw Ofgem hike April’s energy price cap by 54 per cent, while the energy price cap put dozens of companies out of business.