Cheap energy can be energising

 

            Yesterday David Cameron made a speech on the economy. In it he pointed to two new departures. He has “asked the Treasury to examine what more we can do to boost credit for business, housing and infrastructure”. He also said that more reform was needed in energy: “It means recognising the risks to the recovery from rising and volatile energy prices and working together to ensure energy security”.

              We have often discussed how to establish competitive banks with money to lend for good projects. Today perhaps we should consider how we might have a more plentiful supply of attractively priced energy. That would be good for business, and good to tackle what Labour called “fuel poverty”. All too many individuals and businesses have experienced a big squeeze in recent years from the ever rising energy bills they have faced. High inflation, with energy an important  part of it, has squeezed family budgets and cut demand for goods and services as a result.

                 The US industrial recovery is better than the European. There are two magic ingredients.One is more working banks with money to lend. The other is cheap energy. US gas prices are around one third of the European levels. The US has moved quickly to exploit shale gas. It has found a lot of it, and is pressing on with development of the resource. Cheap energy turns more factories. It boosts heavy energy using indistries like steel and chemcials,glass and ceramics.

                The UK should recognise that pursuing a single country approach to limiting carbon dioxide emissions may not help the planet as greens intend, but it can certainly hinder UK industry. If we succeed in shutting down or preventing new energy using industries here by charging too much, we will import the products from overseas where the energy will still be burnt.

                  The UK has good reserves of gas, shale gas, coal, and oil. The government needs to set tax rates and a licensing regime which allows expansion of output at affordable prices. It started to move in this direction with tax changes in the most recent budget.  Mr Cameron reflects the mood of the country when he says he wants to cut our dependence on imported hydrocarbons.  As more is discovered in the UK, and more produced, so gas prices should come down.

                  The Energy Department is also well aware of the need to prompt more electricity generation capacity. The cheapest is combined cycle gas production. They have licensed more capacity, but need to investigate the build rate. The current regulatory framework seems to be delaying or deterring the build of these much needed plants. The relative cost analyses suggest that nuclear is much dearer than gas, unless you assume large future increases in the gas price. They also show that many renewables are also expensive. These statements are based on figures prior to putting in penalties for carbon dioxide emissions.

                The Energy Department has started to cut the subsidies for some renewable technologies. There is a good argument for doing so. The cost of installations for solar, wind, and others is coming down as the volume of these methods grows. At the very least the subsdies should be cut to avoid super profits as the capital costs fall. The subsidies are paid for by the consumers.

                 In a very competitive world a country wishing to power an industrial revival needs to keep its power costs down, as they are such an important element in total costs. We also need to do something about domestic fuel prices, as they are one of the main reasons why inflation has stayed high and why real incomes have been falling.  Energy is a very managed market. The government needs to provide the licences, the planning permissions and the pricing and subsidy regime that helps the consumer more.

 

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149 Comments

  1. Adam5x5
    Posted May 18, 2012 at 5:29 am | Permalink

    “The government needs to provide the licences, the planning permissions and the pricing and subsidy regime that helps the consumer more.”

    That last sentence sums up what’s wrong with the energy industry and the country as a whole.

    The government needs to get out of the way and let the market work, instead of foisting unwanted and expensive subsidies for fluffy-bunny friendly policies. The regulation should be reduced and the tax on energy cut significantly. This can all be paid for (if we need to pay for it) by slashing the public sector down to size, cutting welfare, stopping foreign aid and leaving the EU.

    The high tax on fuel use is the main reason why the domestic economy is in trouble. People don’t have any spare money because filling up their car costs so much – and now that people are using more efficient cars, the treasury is planning on putting up the tax to compensate for lost income which they expected. Showing another problem.
    Namely that the government makes overly optimistic projections and then plans to spend to those projections. So when the income doesn’t materialise, taxes go up.

    We are close to a tipping point and we need drastic action. We need a Thatcher.
    As stated in today’s telegraph:

    “you have to go through Heath to get to Thatcher”
    Cameron is Heath.

    When will our Thatcher arrive and who will it be?

    http://www.telegraph.co.uk/finance/financialcrisis/9272356/Turn-off-your-iPad-David-Cameron-and-start-dealing-with-Britains-debt.html

    • alan jutson
      Posted May 18, 2012 at 7:57 am | Permalink

      Adam

      Yes agree, our fuel prices are high BECAUSE of Government policy, and BECAUSE of Government tax rates.

      On Transport.
      If they reduced the cost of fuel tax, they then want to tax roads.
      In fact they still increase fuel tax, and now want to add a road usage tax.

      On Gas and Electricity.
      It is is now common knowledge that the Green agender adds at least 10% to the cost.
      Lack of a replacement power station build programme means we now run less efficient power generators with older equipment.

      On Oil.
      Recent higher taxes have reduced exploration and extraction.
      Thus more has to be imported.

      JOINED UP THINKING ?

      • Cliff. Wokingham
        Posted May 18, 2012 at 10:11 am | Permalink

        As the government tax and tax again energy in the name of the new false religion, so we become less and less competitive in the global economy. Because all prices are, at one level or another, linked to energy costs, so inflation soars. Government will then use this as the excuse to raise interest rates which will stall the economy again, should it ever get going.

        The last government removed fuel duty relief from bus companies thus pushing up the cost of bus travel even though, both they and Cameron’s blu-Labour both advocate using public transport. We can’t afford to travel now by any method neither private nor public.

        We are double taxed on fuel; VAT on fuel duty.
        I think we should push to get a breakdown on fuel receipts at our petrol stations, as to what the net cost is made up of.
        Let’s see total cost of fuel, fuel duty and VAT all itemised on the receipt and thus, show that much of the real problem of high fuel costs, comes directly from a greedy, over spending government.

        I agree that we have reached a tipping point and I fear civil unrest if our government doesn’t sort things out soon rather than just playing PR games in the media and tinkering around the edges.
        Does our government want our country to fail so that the EUSSR can appoint their own government on us? That’s what it often seems like to me.

        • David John Wilson
          Posted May 18, 2012 at 12:31 pm | Permalink

          VAT should be removed on fuel even if it means increasing VED. There are inherent extra costs in delivering fuel to remote areas. It is completely wrong that these extra costs should be exagerated by VAT.

      • Mark
        Posted May 18, 2012 at 10:32 am | Permalink

        Last year’s budget encouraged the premature closure of existing fields, threatening the associated infrastructure of pipelines that might be used for other small discoveries nearby. Once shut it, it can be very costly to restart production. Thus it is not only further exploration that was hit, but existing production and future development of existing discoveries. It remains to be seen whether the revisions this year are enough to prevent further self-inflicted injury.

    • uanime5
      Posted May 18, 2012 at 6:59 pm | Permalink

      The problem with the energy market is that they don’t want to build anything unless they’re give a large subsidy. This is why energy companies aren’t queuing up to build power plants.

      • Mark
        Posted May 18, 2012 at 9:44 pm | Permalink

        The problem for the energy market is that if you build uneconomic plants because the government interferes in the market with taxes and subsidies, you run the risk that the subsidies will run out and leave you with a plant that loses money. This is exactly why we have seen several companies pull out of possible nuclear plants and large offshore wind schemes. On the other side, if you wish to build something that would make economic sense absent subsidies, you have to fear that government will tax and regulate it into uncompetitiveness.

        UK energy plans are so unrealistic that no energy company can trust them.

        • lifelogic
          Posted May 19, 2012 at 1:05 pm | Permalink

          Exactly.

  2. ianwragg
    Posted May 18, 2012 at 5:35 am | Permalink

    Only the EU won’t let us subsidise our industries. I see the nuclear option is in doubt as we can’t give a minimum price for the generation. Of course France & Germany would ignore these EU dicktats but the Lib Dumbs are all for them.
    When the energy minister says shale gas can only be used with carbon capture but its ok to import lng from Qatar I think they’ve lost the plot. Do they not know that both fuels are methane so why the distinction.
    Germany has opened 11 coal fired stations last year and has more in the pipeline. How come they can and we can’t.
    Do you have to have a degree in stupidity to become a politician

    • Mark
      Posted May 18, 2012 at 10:47 am | Permalink

      In Holland they are building 6 additional coal stations to supply Germany now that they have gone anti-nuclear in the aftermath of Fukushima. The insult is that Dutch consumers are having to pay for the upgrade to the transmission network to enable the power to be delivered to Germany. Germany is “offshoring” coal generation to hide the non-green element – though it does at least make sense to unload coal from Capesize vessels direct to Maasvlakte power stations right at the mouth of the Rijn rather than transfer it to barges.

  3. norman
    Posted May 18, 2012 at 5:53 am | Permalink

    As someone who works in the oil industry I see investment for exploration and exploitation being cut back, fields allowed to run down, major operators leaving the north sea (the most recent being Exxon Mobil). I know that the left will cheer this but how this government could have raised already exorbitant oil taxes even higher and not foresee this beggars belief.

    A lot of damage has been done, but as long as there’s a pound to be made companies will still explore but not as much and are investing less in upgrading current producing assets.

    All easily foreseen, but there you have it, another disaster – introduce this tax, things start going wrong, then a fine speech about improving our energy security. The man really is a blithering idiot.

    • norman
      Posted May 18, 2012 at 6:23 am | Permalink

      Without giving away anything I shouldn’t I can say that the department I work in has had it’s budget for the year cut by a 9 figure (yes, nine) sum a few months back so that it could be spent on other regions. That money would have been spent with engineering companies the length and breadth of the UK. I imagine this situation is being repeated elsewhere.

      And still there will be those who say higher taxes don’t make capital flee.

      • Bazman
        Posted May 18, 2012 at 5:30 pm | Permalink

        Your budget was cut to save taxes…

        • norman
          Posted May 19, 2012 at 11:32 pm | Permalink

          your right but not for the reasons you think. the money was taken from us and given to Australia region because taxes here are too high so it was to save tax over the longer term. also the department I work for isn’t production but one that can be used to lower your tax liability. so even if as you wrongly think the money was offshored to avoid tax (which is a nonsense) ours would be the last it would be taken from.

          the sad fact is the UK is now seen as low priority and despite what you may think there stilla lot of hydrocarbons out there. even in mature 30 year old field there are new reserve being continually found.

          if you don’t want to believe it fine but it does nota alter the facts.

          • Susan
            Posted May 20, 2012 at 9:09 am | Permalink

            Norman,

            You are right that due to the current tax regime, companies are now investing in Countries where the return on the capital is greater.

            However as I have already stated below, there were proposed concessions by the Government in this years budget, which will provide tax incentives on small undeveloped fields, existing brown fields and the eventual abandment of mature fields. I understand these should be enacted by Parliament in July.

    • Cliff. Wokingham
      Posted May 18, 2012 at 10:17 am | Permalink

      Sadly, it appears that both Messers Cameron and Osbourn are socialists at heart and like all socialists, they think money grows on trees and that all wealth belongs to the state and that people should be happy to give all their time, effort and wealth to that state and be grateful for a coulple of coppers pocket mone, when the state has spent the rest.

      If only we had a Conservative government!

    • Susan
      Posted May 19, 2012 at 3:52 pm | Permalink

      Norman

      Exxon Mobil have left Aberdeen that much is true. However those assets were then purchased and are being worked by Apache Oil. There has been no lose to the industry from this. It was agreed in the budget and will be enacted in law in July that there will be tax incentives put in place for small field developments and for mature field continuity.

      As to cuts to your budget, it depends on what percentage of your budget that is. Sometimes nine figures, particularly in the oil industry is not significant.

      • norman
        Posted May 19, 2012 at 11:51 pm | Permalink

        I know more than you can imagine about the buyout but Apaches budgets are smaller than exxon so we’be lost possible future investment of billions from the world largest oil company. to see that as anything but bad news is short sighed. and regardless if the percentage that money was already allocated to be spent here amd later moved. it wasn’t done as a cost cutting exercise. and what difference does it make what the percentage is, surely we want that money spent here?

        • norman
          Posted May 19, 2012 at 11:54 pm | Permalink

          I know no one will ever read these comments but the complete lack of understanding by the left encouraged by lurid tales of tax dodging by Osborne is so frustrating when the actual situation is so different.

  4. lifelogic
    Posted May 18, 2012 at 6:04 am | Permalink

    Given the lack of banking, high energy prices, the green religion, over taxation and regulation and the lack of government vision. I am surprised the UK is doing as well as it is.

    So what is Cameron up to today £100 vouchers for parenting classes “Free parenting classes are not a “nanny state” policy” he claims. Well what on earth is then? What a sense of priorities this Europhile, socialist has.

    The state has, in fact, a truly appalling record of organising child homes and child care but now wants to teach us all how to do it using taxes taken of the same parents I assume doubtless wasting half in the admin process before the £100 voucher is returned.

    On energy there should be no subsidy at all for green tosh people will invest in it if and when it makes sense to invest. In the mean time coal, gas, oil, nuclear, fracking are the way to go. When and if wind and if PV ever make sense and the technology actually works financially people will invest in them.

    Grant are not needed – they just make people do stupid things by government decree as usual.

    • lifelogic
      Posted May 18, 2012 at 6:15 am | Permalink

      So not the usual “tax, borrow and waste” this time but “tax, borrow and indoctrinate” the parents. It might be better parents if they still still had their child allowances recently stolen and were not so over taxed in general. That way they might have a little more time and money to do the parenting job well and still earn a living too.

      Any needing help could then perhaps get it with their own money as and if they needed it.

      • scottspeig
        Posted May 18, 2012 at 9:39 am | Permalink

        I don’t know how you use the phrase “had their child allowances recently stolen”. As a person who does receive child allowance, and had a rather nasty shock of having £3000 less this year from April, I can still say that the concept of paying me with other peoples money for the fact that I have a child is bizarre in the least, and given the choice would vote against that measure (although as it’s available, I’ll still have it!).

        I agree with the taxing less of course!! 🙂

        • lifelogic
          Posted May 18, 2012 at 6:35 pm | Permalink

          I agree it would be better to lower taxes (rather than tax & waste money in collection and then redistribution) but they are putting taxes up and cutting services everywhere too.

        • Bazman
          Posted May 18, 2012 at 8:41 pm | Permalink

          Says scottspeig on a sustainable income. Or not skint.

    • Bazman
      Posted May 18, 2012 at 5:25 pm | Permalink

      No subsidy for nuclear then? Have a little think as to why nuclear needs subsidy? To much safety? That is as stupid as thinking that you need to consume more food to in order ride a bike or else you would not have enough ‘fuel’ resulting in starvation over time. Not Real.

      • lifelogic
        Posted May 19, 2012 at 1:10 pm | Permalink

        You do need to consume more food if you ride a push bike – where do you think the energy comes from magic perhaps?

        • Bazman
          Posted May 19, 2012 at 5:43 pm | Permalink

          Most people consume to many calories anyway. Who consumes to few calories that you know? Again unless you are on the limit of fitness and have a carefully regulated calorie intake to balance this then this is again not real. Is this arguments supposed to be’ scientific’? If it is then you have not taken into account this large common variable. In other words it’s absolute tosh and speaks volumes of how you think.

          • lifelogic
            Posted May 20, 2012 at 8:55 pm | Permalink

            It is not tosh, just basic physics. Someone (who retains the same constant weight) will need to eat more each week if they do more travel by bike and do less travel by car.

            Steak, chips and claret are not a very efficient fuel system, when the fuel chain (sunshine to steak and chips on the plate) is considered in the whole. If it is, then clearly we should invest in a steak, chips and claret car – I think this is rather unlikely to make any sense – the same clearly applies to cycling – should you believe in the c02 religion. Personally I think the religion is a huge exaggeration anyway, and so continue to happily cycle free of any guilt – but well aware of the 15 times + greater risk to life as compared to car.

          • Bazman
            Posted May 21, 2012 at 5:04 pm | Permalink

            The way to fitness is to eat less and do more exercise. By this implication you are saying a person would starve if more food was not consumed. Clearly nonsense. When exercising the urge to eat more should be resisted. What you are proposing is non-scientific science. You are trying to prove something that is not true.

          • lifelogic
            Posted May 21, 2012 at 10:43 pm | Permalink

            Ask any other sensible physicist (if they agree with you they are not one). The energy used to power a push bike comes from the sun, to grow food or drink, then eaten or perhaps fed to cows and pigs to be packaged stored transported, frozen, cooked eaten, and turned into muscle power, C02, waste body heat, urine and poo.

            How can it be otherwise? If you are active you clearly need more food to keep at the same weight.

          • Bazman
            Posted May 22, 2012 at 5:21 pm | Permalink

            You do not need more food to maintain the same weight. Most people need lees the evidence is all around. There is to many obese people are their not?. You would have to bike for miles to use the calories in a Mars bar. Silly literal science from you

    • uanime5
      Posted May 18, 2012 at 7:03 pm | Permalink

      It’s far better to pay for parenting classes than social workers for dysfunctional children.

      • Bazman
        Posted May 18, 2012 at 8:49 pm | Permalink

        For the first time I have agreed with Cameron. How much gets to where it should is debatable. We relied on the health visitor for advice. Money was not the problem or is for the biscuit. etc

      • lifelogic
        Posted May 19, 2012 at 1:15 pm | Permalink

        Nonsense – far more likely to getting parenting classes from dysfunctional parent “experts” with no children and a “qualification” from the metropolitan university of Bangor East or something.

        Anyway 99% do not need them and the 1% that do will not turn up.

  5. colliemum
    Posted May 18, 2012 at 6:24 am | Permalink

    I’m glad that this simple fact has been recognised by you, and hope that you’ll get your colleagues and above your cabinet colleagues to recognise it as well:
    “The UK should recognise that pursuing a single country approach to limiting carbon dioxide emissions may not help the planet as greens intend, but it can certainly hinder UK industry.”
    However, as long as the government does not understand this obvious truth: “We also need to do something about domestic fuel prices, as they are one of the main reasons why inflation has stayed high and why real incomes have been falling.” and acts on it, then all the efforts of making the economy grow will be futile.

  6. Mike Stallard
    Posted May 18, 2012 at 6:24 am | Permalink

    This is not a rant, it is a straight question to which I do not know the answer:

    How much of the delay over perfectly safe fracking is down to the greenery of the EU?

    Reply: I have no idea. No Minister have ever said they cannot get on with shale gas owing to EU rules.

    • lifelogic
      Posted May 18, 2012 at 7:55 am | Permalink

      A lot I would say. I suspect the failure to build proper water storage systems and the like is too.

      The BBC is desperate to blame anything at all on global warming (now climate change) since it stopped warming in 1998. To the BBC it is a given despite what the temperature measurements say or the science say.

      • Bazman
        Posted May 18, 2012 at 9:01 pm | Permalink

        Why should the North West fund any absurd and pointless water storage systems? We have adequate water supplies ourselves. Ram it.

        • lifelogic
          Posted May 19, 2012 at 1:16 pm | Permalink

          No one was suggesting them for the north west were they?

          • Bazman
            Posted May 19, 2012 at 5:45 pm | Permalink

            You were suggesting funding from taxation for waters storage in the UK which would include money from the North West. Can you not even read your own posts?

          • lifelogic
            Posted May 20, 2012 at 8:56 pm | Permalink

            I did not suggest funding from taxation at all.

    • Mark
      Posted May 18, 2012 at 11:06 am | Permalink

      I don’t think the EU has had time to work up a directive on this. Instead, politicians in individual countries have been blocking developments and exploration efforts: that certainly applies in France, Bulgaria, the Czech Republic, Ireland and of course the UK. Meanwhile drilling goes ahead in Poland and the Ukraine has just announced a major development.

      • Mark
        Posted May 18, 2012 at 12:48 pm | Permalink

        There is a useful list of EU energy directives at the bottom of this link:

        http://www.energy.eu/#domestic

        • Bazman
          Posted May 18, 2012 at 9:07 pm | Permalink

          Remember though. The absurdly higher taxes of the EU in general. Darling. We know how much you love European holidays because they are so cheap! Ram it.

    • A Different Simon
      Posted May 18, 2012 at 12:45 pm | Permalink

      Some countries are unable to govern themselves these days and are waiting for the EU to tell them what they should do .

      Wastewater disposal rules are stricter in the EU than US but should not be relaxed .

      The problem is that European and UK politicians want to maintain the high energy prices that nuclear and renewables need to be viable .

      We don’t only have Govt trying to pick winners we have them deciding them .

      The specific problem for the UK is that Ofgem , which is supposed to ensure a proper market for electricity and gas , has become captured by the major suppliers .

      Ed Davey didn’t actually say that domestic shale gas , or domestic north sea gas , could only be used for electricity generation if it was allied to carbon dioxide and capture .

      I hope his mention of them together was just a token gesture towards those who have bought the AGW stuff hook line and sinker .

      Alistair Buchanon the head of Ofgem must be sacked and Whitehall purged of fifth columnists .

      • Mark
        Posted May 18, 2012 at 9:51 pm | Permalink

        OFGEM has become captured by the Greens in DECC. Ed Miliband specifically legislated that OFGEM should place green issues ahead of everything else including consumer interests in economic energy supplies (Energy Act , 2010). The energy companies simply comply, and pass on the costs – but more of them are becoming wary that DECC plans are unsustainable, and so they are pulling out of projects such as new nuclear stations.

    • Barbara
      Posted May 18, 2012 at 1:44 pm | Permalink

      ‘No Minister have [sic] ever said they cannot get on with shale gas owing to EU rules’

      Not in so many words, no, but Ed Davey *nearly* said it yesterday, in a (non) reply to a question by Graham Stringer:
      http://www.bishop-hill.net/blog/2012/5/18/number-10-discusses-shale-gas.html

      The anonymous ‘expert’ advice given to no 10, which led Davey to pour cold water on the idea of pressing ahead with shale gas, seems suspiciously similar to Desutsche Bank’s official position.

      • A Different Simon
        Posted May 18, 2012 at 5:31 pm | Permalink

        I initially thought the Govt wanted UK shale gas to fail because they didn’t have the balls to assure the public it can be done safely .

        Now it’s become clear that problem is that shale and the possibility of cheaper energy prices are too disruptive .

        As a British Citizen , surely you have a right to expect elected representatives to act in the UK’s interests rather than against them ?

    • uanime5
      Posted May 18, 2012 at 7:05 pm | Permalink

      Given that perfectly safe fracking doesn’t exist it’s impossible to answer your question. Since fracking can lead to water contamination it can’t be considered ‘perfectly safe’.

      • A Different Simon
        Posted May 18, 2012 at 8:57 pm | Permalink

        Neither can flying .

      • Mark
        Posted May 18, 2012 at 9:54 pm | Permalink

        Windmills aren’t perfectly safe either: nothing can be. Fracking is much safer than windmills: it doesn’t kill millions of birds for a start.

        • uanime5
          Posted May 19, 2012 at 11:22 pm | Permalink

          Not it doesn’t. If they did the RSPB would have evidence of this.

      • lifelogic
        Posted May 19, 2012 at 1:17 pm | Permalink

        Nothing is ever “perfectly safe”!

  7. Pete the Bike
    Posted May 18, 2012 at 7:07 am | Permalink

    Why is it that politicians want “reform” and not simply deregulation which is what is actually needed? Reform is just tinkering with the regulations to benefit one group over another (as is all government interference). Deregulation lets the free market run things and that is always going to be immensely more efficient than any group of politicians. Have we forgotten the lessons of the Soviet Union collapse and it’s 5 year plans?

  8. Atlas
    Posted May 18, 2012 at 7:08 am | Permalink

    Agreed.

    However a lot of current decisions are made on the assumption that changes in the weather have as a significant cause, man-made Carbon Dioxide emissions. This assumption is a result of a particular reading of present and past data. We know that in the past there have been sustained changes in the weather patterns over aeons when man’s CO2 emissions were negligble, yet these observations get brushed aside. I strongly suspect that we are like a Doctor trying to cure a patient of an illness he does not have.

  9. Rebecca Hanson
    Posted May 18, 2012 at 7:10 am | Permalink

    This table of data is quite useful as context for discussion this.
    http://en.wikipedia.org/wiki/Electricity_pricing#Global_electricity_price_comparison
    Do you have anything more recent John?

    Reply: There are many figures which I have drawn on on the UK government’s energy website.

    • Rebecca Hanson
      Posted May 18, 2012 at 12:16 pm | Permalink

      Do they all indicate that we have the cheapest energy in Europe or have you found some information on European countries with cheaper energy?

      • outsider
        Posted May 18, 2012 at 6:21 pm | Permalink

        The wikipaedia figures are confusing but two things stand out.

        France, the only country that draws most of its electricity from atomic power, has the lowest pre-tax price in the EU. Denmark, which is keenest to promote wind power, has the highest retail price. And, of course, France has no real problem with carbon emissions.

        Naturally, M.Hollande is hostile to atomic power. It seems likely that this may scupper any new UK atomic power programme, with the possible exception of Hinkley Point C, but he may be persuaded to countenance more development in France to export power profitably to Germany (to supplement the new Dutch coal stations mentioned by Mark).

        The vaunted new Single Market in energy, so eagerly backed by our own government, will clearly benefit these three countries.Somehow, I cannot see it attracting either new investment or cheaper energy imports into the UK.

        • Rebecca Hanson
          Posted May 19, 2012 at 9:10 pm | Permalink

          blimey – let’s home M Hollande faces some internal barriers to completely destroying the French economy.

    • uanime5
      Posted May 18, 2012 at 7:11 pm | Permalink

      I’m surprised that so many EU countries have higher energy costs than the UK. Given all the complaining about the cost of energy you’d think the UK has one of the highest costs of energy in the EU, rather than one of the lowest.

      I wonder why companies that need cheap energy but want to be in the EU aren’t coming to the UK.

    • Mark
      Posted May 18, 2012 at 10:44 pm | Permalink

      Those prices are for domestic supply. It is interesting that the countries most advanced with wind and solar have the most expensive domestic tariffs, with consumers paying heavy green taxes in Denmark and Germany. This will happen to the UK if we persist in investing in uneconomic energy.

      Industrial tariffs look somewhat different. However, the countries with the cheapest supplies have natural hydro resources on a large scale, use coal extensively, or have large nuclear industries.

      Some data here:

      http://www.energy.eu/#domestic

      Also note the absurd levels of FiT – particularly for solar in some countries, including the UK (although the subsidy has now been halved for future installations).

  10. History Lover
    Posted May 18, 2012 at 7:11 am | Permalink

    As usual John an excellent analysis of the problems our country faces and the way to solve them. Hopefully someone from the Energy Ministry will read it and act accordingly. I think we seem to be following Labour’s policy of keeping energy costs high and therefore people won’t be able to afford it, our energy usage will fall and we will have kept our promise on carbon emmissions. Unfortunately, for people already in fuel povertyin the domestic market, that means they could die of hypothermia, while cheaper energy for the commercial market means there could be more jobs therefore lifting people out of poverty. Win, win situation. Labour were never very good at thinking things through to benefit everybody, we must not follow their example.

  11. John Wilkinson
    Posted May 18, 2012 at 7:31 am | Permalink

    Waking up to shale at last?

  12. A.Sedgwick
    Posted May 18, 2012 at 7:45 am | Permalink
  13. Richard1
    Posted May 18, 2012 at 7:57 am | Permalink

    Another magic ingredient in the US economy – despite 4 years of Obama – is lower taxes.

    The Conservatives need to start now, well ahead of the election, to re-position on global warming, as evidence mouts that the whole scare dating back to the late 80s has been hugely over-blown. Yet so much of tax, spending and regulatory policy is predicated on the certainty of enivromental disaster due to CO2 emissions. The public reaction against green scare-mongering, given its costs, could be very harsh once the scare is shown to be false.

    • Gewyne
      Posted May 18, 2012 at 9:07 am | Permalink

      The Greens will just say it failed to materialise because of the action taken.

      • Richard1
        Posted May 18, 2012 at 2:19 pm | Permalink

        They’d be wrong. CO2 emissions have continued to rise – but there hasn’t been any warming. Interestingly the only developed country to have reduced CO2 emissions recently is the USA – not a signatory to Kyoto – due to the extensive use of shale gas which has 1/2 the emissions!

        • uanime5
          Posted May 18, 2012 at 7:12 pm | Permalink

          Half the emissions of what?

          • lifelogic
            Posted May 19, 2012 at 1:18 pm | Permalink

            Coal I assume.

        • Mark
          Posted May 18, 2012 at 11:30 pm | Permalink

          Actually, many countries have reduced emissions – mainly in Europe – but this is perhaps a measure of economic stagnation. In 2010 the UK had the second lowest emissions of any year back to at least 1965. On present trends China will exceed UK emissions per capita well before 2020.

  14. jenny barnes
    Posted May 18, 2012 at 8:13 am | Permalink

    Cheap energy . Yes. Wouldn’t it be nice. However, we’ve burnt most of it. Peak coal in the UK was around 1913, peak oil in the US 1975, peak oil world round about 2005…
    World energy demand doubles every 35 -50 years. The available energy in the ground – doesn’t. So between say now and 2050 the world will use as much energy as was used up to date.
    The question is not ” would cheap energy be nice” because we know the answer to that. The question is how to get enough energy to run our society – which needs lots of it. I think renewables are probably worth doing.
    The trouble with “waiting till the market says it’s worth doing” is the lag between the two things. Energy demand and supply is enormous – and renewables can only build up quite slowly.

    • Adam5x5
      Posted May 18, 2012 at 9:10 am | Permalink

      Yet you fail to mention other alternatives.

      Nuclear power is the way to ensure plentiful and cheap electricity. Thorium reactors under development produce a lot of energy, are completely safe and the fuel is abundant. We have plenty of oil and gas to last until this technology comes of age. (Though this will require a bit of education of the public who seem to panic as soon as nuclear is mentioned…)

      Renewables are a white elephant and when you actually look at them, not all that environmentally friendly. Not to mention the completely unreliable nature of them – wind not blowing when you need it etc.

      I would also take issue with the amount of energy in the ground not changing. As we develop new technologies like fracking, the number of resources we can access increases and thus the amount of energy in the ground does increase – but that’s splitting hairs.

      • Bazman
        Posted May 18, 2012 at 5:28 pm | Permalink

        Nuclear cheap and complete safe? Safe enough to put within the M25 and paid for without subsidy? You know the answers.

        • Mark
          Posted May 18, 2012 at 11:41 pm | Permalink

          The first nuclear power plant was built in a squash court in downtown Chicago at the University. I’ve been to the location, now marked by a Henry Moore statue in honour of Enrico Fermi.

        • Adam5x5
          Posted May 19, 2012 at 7:01 am | Permalink

          It is as safe as any other method of power generation. It isn’t possible for a thorium reactor to experience accidental thermal runaway as the reaction isn’t self sustaining. Radiation emissions are lower and the products decay quicker.

          The fuel is e easily available and abundant, it’s a by product of aluminium manufacture.

          But of course, this would be a sensible alternative to develop which means the government will stop it ever happening in favour of ridiculous wind farms and the greenies won’t get past the word nuclear before trying to stop it.

          • Bazman
            Posted May 22, 2012 at 5:25 pm | Permalink

            Or the words ‘cost and ‘safety’. Costs from birth to death are unknown per kilowatt generated. Massive subsidies ensure the plants keep running. Safety. One within the M25 then? Never happen and you know it. Fantasy.

    • waramess
      Posted May 18, 2012 at 9:47 am | Permalink

      The problem with politicians and Civil Servants second guessing the future is they have a faultless track record for getting it wrong.

    • stred
      Posted May 18, 2012 at 9:52 am | Permalink

      Good to see the problem of energy resources and consumption brought up instead of CO2 and warming. Almost everyone seems to concentrate on the latter, including the dumbed down BBC. They missed an opportunity to ask James Lovelock how to explain how the forecasts of warming could be reconciled with the miniscule proportion of CO2 in the atmosphere. Also, whether the correlation between CO2 and warming could have been the result of more vegetation following warming for other reasons rather than the cause. His contribution would have been worth listening to.

      However, in the immediate crisis of expensive energy for the UK and low growth etc. it would be helpful to be put on the same footing as competing economies, allowing gas generation and development of shale gas without carbon capture. To do so would require the recinding of Mr Brown’s climate change legislation and ignoring EEC directives.

      Dave and Dummy don’t have to ask the next door neighbour to look into the matter. He could stop playing with his Ipad and read this blog. Then tell his civil servants to do the above. Any bets on how long we have to wait?

    • ianwragg
      Posted May 18, 2012 at 10:28 am | Permalink

      We have enough coal in Britain to power us for 300 years but unlike the Germans we are not exploiting it.
      Much of the residual fuel in the North Sea is not being exploited due to punitive taxation.
      Renewables such as wind and solar will never supply more than a fraction of our needs and if we do have another mini ice age then they will both be utterly useless.

      • uanime5
        Posted May 18, 2012 at 7:15 pm | Permalink

        The cost of mining coal is why the UK isn’t using coal.

        • lifelogic
          Posted May 19, 2012 at 1:20 pm | Permalink

          No we can import cheep coal anyway but the market has been rigged with carbon taxes and regulation to ban it – in effect.

    • Robert K
      Posted May 18, 2012 at 11:53 am | Permalink

      The trouble is, renewables are not “worth it”. The only way they can work right now is through government subsidy. When the the price of non-renewables goes up because of a lack of supply (not because of taxes or Opec price manipulation) then renewables will take off under their own steam (if you would excuse the pun).
      It’s a simple pricing mechanism. And don’t panic about the timeframe. Once technology becomes economically viable it develops at a tremendous pace. Renewables will be there when they are needed, not when some beauracrat deems it.

    • Mick J
      Posted May 18, 2012 at 7:40 pm | Permalink

      Recoverable Oil reserves have been rising of late largely due to new technologies. The US GAO made a presentation to Congress recently and just one field is said to be able to supply US demand for 200 years. Recent proof of concept trials for Methane Hydrate extraction has been successful and this opens centuries of gas supplies if required.

      “Anu Mittal, GAO director of natural resources and environment, testified before Congress last week that just one small part of the U.S. is capable of outproducing the rest of the planet.

      That small part is known as the Green River Formation, the world’s largest oil shale deposit, and is located in a largely vacant region of mostly federal land on the western edge of the Rocky Mountains that includes portions of Wyoming, Utah and Colorado.

      As we have written in our “Oil And Gas/Fact And Fiction” series, the Green River Formation has been dubbed our Persia on the Plains, an area with technically recoverable oil in an amount estimated at four times the proven resources of Saudi Arabia.”

      http://news.investors.com/article/611380/201205141900/green-river-equal-to-worlds-oil-reserves-.htm

  15. david
    Posted May 18, 2012 at 8:32 am | Permalink

    The Tories and ‘cheap energy’ an oxymoron, with the stress on moron. In 1981 the then energy minister David Howell taxed gas raising it by 8% above the inflation rate for 4 years. Under John Major the Tories again tried to put the full rate 17.5% VAT on domestic energy in two tranches they achieved 8% failed to raise to the full amount couldn’t get the votes. Privatisation of energy, the greatest criminal conspiracy to defraude the British people ever devised, which now means that foreign owned cartels now have the consumer in their ever tightening grasp.

    Return energy to the public sector where it belongs, without compensation they’ve had more than enough.

    • waramess
      Posted May 18, 2012 at 9:44 am | Permalink

      The public sector cannot be the answer. Do you really expect a gang of politicians to treat the public in a more fair way than foreign owned cartels?

      Energy should be treated by the regulator as a utility: very little risk and therefore a pedestrian reward.

      Proper regulation by the regulator of energy and water is the answer not public ownership.

      • stred
        Posted May 18, 2012 at 8:49 pm | Permalink

        Do I rememember rightly? The regulator is paid by the producers/sellers.?

    • Mark
      Posted May 18, 2012 at 11:34 am | Permalink

      VAT at least is neutral between the different kinds of energy, whereas the hidden subsidy and tax system we now have favours some over others. That system encourages investment in uncompetitive methods of supply, and locks us in until the investment can be written off. These bad choices are not a consequence of private ownership, but of regulation and government interference in markets.

      The foreign companies of the Big 6 acquired their interests in the UK almost exclusively during the Labour years (mainly between 1999 and 2005). Prior to that foreign ownership had been quite limited – indeed, several UK companies had expanded abroad, although not always successfully. Labour were keen to use the proceeds of sell-off to help fund their massive spending programme.

  16. Alex
    Posted May 18, 2012 at 9:10 am | Permalink

    Interesting data that Rebecca points to (thank you Rebecca).
    It shows that prices aren’t particularly high by Western Europe standards, but are by world standards. So we are damaging our economy and industries no faster than the rest of Europe. Compare with the 2 countries with a famously booming manufacturing sector; US and Chine.
    Of course to workl out the true cost of electricity we would need to add to this the per kw/hr cost of all taxpayer funded renewables subsidies (plus a proportion of the cost of DECC), since we pay extra taxes in order to subsidise renewables.

  17. Gewyne
    Posted May 18, 2012 at 9:38 am | Permalink

    Just read the articles linked.

    “As Benedict Brogan revealed yesterday, a small group inside No 10 had drawn up proposals for an immediate cut in corporation tax to 15 per cent. This would have been a game-changer – a clear signal that Britain was open for business with the one of the lowest corporation taxes on the planet. The idea was for companies to come flocking back from Ireland, itself sending a signal, and the cost of the tax rise would be funded by welfare cuts (which remain popular).
    But the plan was rejected out of hand by the Treasury, and its advocates were given no help at all from Mr Cameron”

    I think this sums up what is happening.

    We are on course in 2015 to have the largest deficit in the Western World – David Cameron will tell us of all the gran plans he had, when asked why he did not implement any he will shrug his shoulders and walk of into the sunset with his Parliamentary pension for life, cosy job offers sitting on boards and we will be left wondering why the Conservative party let him destroy their election hopes for another 3 terms (this time around 15 years).

    • uanime5
      Posted May 18, 2012 at 7:18 pm | Permalink

      What’s the point of lowering corporation tax if companies don’t want to invest in the UK? Until the euro crisis ends companies will continue to horde billions of pounds, rather than invest it.

      Also welfare cuts are always unpopular, such as the granny tax and the loss of child benefit. I suspect this is one of the reasons why it was rejected.

  18. waramess
    Posted May 18, 2012 at 9:39 am | Permalink

    A lot of anger on this site today. About time too. It will benefit the mood for change whether by the existing incumbent or his replacement.

    There is a lot more wrong with the economy than just energy prices but that is not a bad place to start because it requires so little effort…unless, of course, we are already committed to buying windmills into the next century.

  19. Leslie Singleton
    Posted May 18, 2012 at 10:23 am | Permalink

    I don’t think much of your use of “solar wind and others” to describe renewables. “And others” doesn’t begin to do justice to the power and absolute reliability of the sea especially in estuaries. If tidal power has problems (what doesn’t?) because of the difficulty and cost of building the barriers there should be much more heard (at present very little is heard) about marine turbines and undersea watermills. I have no financial interest in marine power, more’s the pity, but it seems to me that they are self-evidently the way to go. Corrosion by the sea is about the only problem I can see and admittedly not to be sneezed at but there would appear to be no reason why corrosion should be any worse in a marine turbine or mill than that in the turbines of a tidal barrier. Why doesn’t the Government, and your good self, talk up this source of energy instead of the ridiculous ordinary windmills which are useless when you want them most (says me)?

    • Mark
      Posted May 18, 2012 at 11:38 am | Permalink

      Tidal power now is entitled to the largest subsidies (getting up to five times as much for its output as conventional coal or gas). That doesn’t seem to be enough to make it work economically.

      • Leslie Singleton
        Posted May 18, 2012 at 2:14 pm | Permalink

        You use the term Tidal Power but I for one do not know what that covers. Are you saying that tidal barriers (plus lagoons and all the rest) get the same subsidy as marine turbines and mills based just on flow? That would seem to me to be extraordinary–apart from the fact that water is involved in both cases there is little comparison. One point is that a principal plank for opposition to barriers is damage to fish or some lesser spotted bird. None such is caused by a suspended turbine or mill fastened to the sea bed.

        • Mark
          Posted May 18, 2012 at 9:36 pm | Permalink

          Right up to date:

          This has been further underlined by the Government’s proposals to offer support to wave and tidal stream energy at 5 ROCs/MWh under the Renewables Obligation through its banding review and by the recent launch for applications of DECC’s £20m Marine Energy Array Demonstrator (MEAD).

          http://www.publications.parliament.uk/pa/cm201213/cmselect/cmenergy/93/9304.htm

          • Mark
            Posted May 18, 2012 at 9:38 pm | Permalink

            So that’s actually SIX times the market price for electricity, via a 500% subsidy.

  20. Neil Craig
    Posted May 18, 2012 at 10:26 am | Permalink

    Economic Freedom + Cheap Energy = Growth

    Nobody seriously denies this, though for decades the political class have simply refused to discuss it and then gone on to some further bit of Luddism to make energy more expensive.

    That is the cause of the recession.

    If Cameron is starting to make noises, let us wait till he actually does something. He has spent years promoting higher energy prices & refusing to even consider the alternative.

    We could be out of recession in days if the business community could have the confidence that our government is really trying to end the recession thus.

    On the particular methods you mention I generally agree. In particular we have had an undeserved lucky break in shale gas – one which the ecofascists hate and which Huhne specifically promised the LibDems he would stifle.

    On nuclear I am going to disagree with John. It is only more expensive than gas because of political parasitism. The French can do nuclear far cheaper (indeed it is the lynchpin of their economy). Since the laws of physics are the same on both sides of the channel, so can we if the political will is there. Indeed it is more than likely that if unnecessary regulations were removed; generators could be built in 3 years (China is currently building more nuclear capacity than Britain’s entire baseload at that rate) rather than spending anothe 7-9 years doing paperwork; and if mass production techniques were allowed then nuclear electricity would cost not more than 1/4 of current costs or under 10% of what British electricity costs.

    All that is required to get out of recession and into fast growth is for the politicians to get out of the way and allow the free market, with a level regulatory playing field, to supply as much power as there is a market for. Eben the USSR, in the 1930s, managed to beatv 10% annual growth by increasing electricity producyion 23% annually.

    When Cameron actually does this rather than just making a very few ineffectual noises we may relax.

    Reply: I am assured by Ministers that nuclear builders can offer their product just like anyone else. I just don’t think they can make the numbers work without subsidy/high carbon price. The market will decide.

    • Mark
      Posted May 18, 2012 at 11:53 am | Permalink

      Growth in the USSR in the 1930s was achieved by first destroying the economy almost entirely.

      • Neil Craig
        Posted May 18, 2012 at 2:02 pm | Permalink

        Perhaps but by WW2 they had a big enough economy to whip Germany. Whatecver you think of the USSR that achievement is real and flies in the face of most free market thinking.

        I believe the explanation is that when you increase electricity production 23% a year even communism can’t prevent 10% general growth. If somebody has an alternative explanation I would be interested to hear it. If there isn’t one the lesson for Britain is obvious

        • forthurst
          Posted May 18, 2012 at 5:49 pm | Permalink

          There is very clear evidence (Icebreaker: Who Started the Second World War?, by Viktor Suvorov (Vladimir Rezun) that the Bolsheviks had been preparing to spread their system of governance including terror, genocide and slave labour to the whole of Europe when Germany invaded. At that time the Bolsheviks had built a massive military machine, which had been under construction longer than Germany’s, deploying for a general invasion and conquest of Europe. It was therefore initially caught off balance by Germany’s pre-emptive strike. But of course history is written by the victors. As long as we have foreign policy constructed by idiots, this country will continue to decline towards irrelevance.

        • Mark
          Posted May 18, 2012 at 7:23 pm | Permalink

          The weather and over-extended lines defeated Germany, just as it had Napoleon 132 years before. Russia started with many more people (nearly twice the population of the Axis powers), and ended up suffering more than decimation to survive.

      • waramess
        Posted May 18, 2012 at 3:42 pm | Permalink

        Mark 11.53

        Ahhhh so thats the cunning plan.

    • uanime5
      Posted May 18, 2012 at 7:26 pm | Permalink

      A medium sized nuclear power plant takes 10 years to build so it’s unlikely to be finished in 3 years.

      Given that the freeze market is currently encouraging companies to save a much money as possible, due to the euro crisis, less regulation won’t lead to companies making large capital expenditures.

      Finally given that Russia was so backwards in the early 2oth century it’s no surprise that giving large parts of the population access to electricity in the 1930’s lead to more growth. However as the majority of the UK has enough electricity 10% growth is unlikely.

      • Neil Craig
        Posted May 19, 2012 at 10:43 am | Permalink

        Uni – Medium sized nuclear power stations have been built in 3 years in China & they are now, as already stated, building more than all the grid in Britain at that rate. If it is being done it is ridiculous, but typical of the greens, to claim that it can’t be done.

        Your second para merely shows that our recession is not in any way caused by lack of investment resources but the government Luddism and parasitism which prevents such investment. With cheap energy most of that discouragement would be ended.

        Finally there is no evidence that growth is easier for poor countries than rich ones – indeed quite the opposite has been the historical precedent. The claim that we have “enough electricity” is an example of the typical totalitarianism of the ecofascists (unfortunately including many Tories). I doubt if many of the 10s of millions of Britons in fuel poverty would agree with that heartless cruelty.

        Mark the Russians massively outproduced the Germans in tanks and artillery. It was not the Russian winter that allowed Russian armies to capture Berlin. If you look up the histories you will find this is so.

        John, as I said to Uni, I would take the fact that such reactors are being built, competitively and speedily elsewhere as confirmation that it can be done. Minister’s assurances that what is being done can’t be done bear less weight. Of course if the ministers insist on loading nuclear down with far heavier taxes, controls, commissions and regulations than competitors they can make it uncompetitive – but is there any industry of which that is not the case?

        • uanime5
          Posted May 19, 2012 at 11:14 pm | Permalink

          Which of China’s 5 nuclear power plants that was built in 3 years? Are you confusing nuclear reactors and nuclear power plants?

          Cheap energy won’t have any effect on business investment. Businesses are not investing because of the crisis in the eurozone, not because of the cost of energy.

          Undeveloped countries grow faster than developed ones simply because they can import the technology they require from more developed countries, rather than have to spend time and money researching this technology.

          You’re confusing fuel poverty and lack of power. The former occurs when there is adequate power generated but the person is unable to afford it and can be resolved by producing the same amount of energy for less cost; the latter occurs when power plants are unable to produce enough power to meet demand, resulting in blackouts. Only in the latter case will producing more electricity fix the problem.

          Russia was able to out produce Germany because they had more factories and resources. This was mainly because Russia was so much larger than Germany. The Germans also lost the war in Russia due to Hitler’s bad tactics and habit of ignoring his generals.

          • Neil Craig
            Posted May 20, 2012 at 1:30 pm | Permalink

            Uni as a typical example of green dishonesty you have repeatedly made assertions on Mr Redwoods threads which you have refused to hustify factually because you know they are lies. Now you have the cheek to ask me to hustify my statement that you are lying about it being ompossible to build a reactor in less than 10 years.

            However, as you represenjt the normal standard of honesty of the greens & I of progressives I woll answer you and prove that we, on average, are infinitely more honest than you. Then of there are any circumstances whatsoever under which you can be considered trustworthy you will publicly acknowledge your eror.

            “China can build a Western-designed nuclear reactor in 46 months, or less than 4 years”

            http://www.instituteforenergyresearch.org/2011/01/06/china%E2%80%99s-nuclear-program-fast-and-relatively-inexpensive/

            Frankly I do not expect such an acknowledgement since I have NEVER encountered an “environmentalist” online who was in the remotest degree concerned about the truth and I do not expect you to be the first.

            Your 2nd para is pointless since the Luddites are both opposed to building new generators and to ensureing that what exists is as expensive as possible.

            The reason Russia had more and bigger factories was because they built them. They weren’t brought by Santa. Your quaint belief that Stalin never made any military errors is not supported by anybody who knows anything of the subject.

    • stred
      Posted May 18, 2012 at 8:59 pm | Permalink

      If we acccept climate change agenda, then urgent solutions are necessary. As James Lovelock has explained, nuclear is much less dangerous than other forms of generation. It follows that we should cut the red/green tape and make it easy to build new plant on existing sites, thereby cutting costs to that enjoyed by the Chinese and French.

    • Bazman
      Posted May 19, 2012 at 8:09 am | Permalink

      Massive subsidies for nuclear paid for by the taxpayer like the French do. Nuclear cannot exist without this. Less safety regulations laughable. Is that OK in your free market fantasy?

  21. oldtimer
    Posted May 18, 2012 at 10:44 am | Permalink

    High energy prices are the responsibility of the last Labour government (Miliband and his Climate Change Act) aided and abetted by Cameron, Clegg and Huhne (with their Carbon Plan). My MP tells me that it is all down to the scientific advice the government receives. This, it appears, is in two parts. First man-made CO2 is responsible for global warming that will become catastrophic global warming unless future man-made CO2 emissions are severely curtailed. Second fossil fuels (the primary source of man-made CO2) are scarce, will get scarcer and come from unreliable sources (like Russia which has form in turning the gas supply off to custoemr it does not like).

    This advice is deeply flawed. The science of CAGW is more voodoo science, a religion, than real science. There is no shortage of fossil fuel in the world – reserves always expand to meet the demand at prices people are willing to pay. Furthermore the technologies for discovery, extraction and transportation of these fuels are improving all the time.

    The government should abolish subsidies for inefficient sources of energy, and set taxes to ensure that end user energy prices are at world competitive levels. That will improve the chances of retaining industrial activity, and the jobs that go with it, in the UK.

    • forthurst
      Posted May 18, 2012 at 12:44 pm | Permalink

      The AGW hoax is a bankster orchestrated scam. They’ve put a lot of money into funding think tanks, climate ‘science’, influencing government policy (in the West). However there may be a silver lining:

      http://wattsupwiththat.com/2012/05/17/the-global-renewable-energy-index-is-crashing/

      Spot the inverse ‘hockey stick’.

    • waramess
      Posted May 18, 2012 at 3:44 pm | Permalink

      Allldown to the government believing that scientists do not tell porkies.

    • uanime5
      Posted May 18, 2012 at 7:30 pm | Permalink

      Declaring real science to be a religion doesn’t make it wrong, it just shows how little you understand it.

      Also believing that you can get infinite resources from a finite planet means you’re either a fool or an economist. Fossil fuels, such as oil, will eventually run out and there is nothing anyone can do about this. We will need alternatives sooner rather than later.

      • oap
        Posted May 19, 2012 at 7:59 am | Permalink

        You should pay attention to James Lovelock who now thinks the global warming case is unsoundly based. Others have pointed out that there are plenty of fossil fuel reserves in the world. The issue is not shortage of supply but cost of extraction. If cheaper sources of energy were to be found, they would be adopted and, no doubt, taxed as well.

  22. forthurst
    Posted May 18, 2012 at 10:58 am | Permalink

    As ever, an excellent analysis but without answering the fundamental question:

    Crass stupidity, deliberate sabotage, nepotism, undeclared compliance with EU diktats? Or a combination of factors?

    We cannot continue to enjoy policies on so many fronts that even the unsophisticated can see will lead to the ruination of this country without wondering whether our politicans or their advisors actively hate the people they are supposed to represent. For more and more people, the feeling is entirely mutual.

  23. Neil Craig
    Posted May 18, 2012 at 11:42 am | Permalink

    On the third hand Bishop Hill draws attention to what the other official line is.

    “Graham Stringer (Blackley and Broughton, Labour): Will not the biggest impact on reducing domestic energy bills be achieved by bringing shale gas online as quickly as possible?

    Edward Davey (Parliamentary Under Secretary of State (Employment Relations, Consumer and Postal Affairs), Business, Innovation and Skills; Kingston and Surbiton, Liberal Democrat): I do not think so. We had a seminar at No. 10 recently, which the Prime Minister participated in, along with myself and the Business Secretary. We heard from experts in the shale gas industry who had been working in America and looking at the major opportunities in places such as Ukraine and China. They were clear that it would take some time for shale gas to be exploited in the UK. They were also clear that we needed strong regulation to proceed and that the shale gas reserves in this country are not quite as large as some people have been speculating.”

    http://bishophill.squarespace.com/blog/2012/5/18/number-10-discusses-shale-gas.html?lastPage=true#comment18146121

    As Bishop says it must be a very unusual group “in the shale gas industry” who say they want more regulation and restriction and that the reserves are not as large as they say they are. It sounds very much like they have been listening ourely to some ecofascist opponents not inthe industry but if that were the case Me Davey would have deliberately lied to Parliament and be immediately fired – assuming either Cameron or the Commons had the slightest objection to Parliament being lied to.

    Either way we seem to be seeing the government promising in 2 opposite directions at once – again.

    • uanime5
      Posted May 18, 2012 at 7:38 pm | Permalink

      Just because you don’t like what someone says doesn’t make them an ecofascist.

      It is impossible to determine how much shale gas is available without analysing the area so it’s no surprise that some speculation regarding how much there could be will be overly optimistic.

      In the USA those involved with fracking wanted specific regulations; such as exemption from the Safe Drinking Water Act. I suspect companies involved in fracking in the UK want similar protections to prevent them being sued.

      • Mark
        Posted May 18, 2012 at 11:55 pm | Permalink

        The geology in the Bowland basin is such that water contamination from the wells is a very low risk indeed. That is because the shale lies a mile and more underground, thousands of feet below the water table, and sealed by impermeable rock layers. Wells are very well lined with multiple concentric rings of concrete and steel tubes. This contrasts with some isolated parts of the US , where the shale lies very close to the water table and the surface: these areas have produced the horror stories. Interestingly, the instance of water with high methane content that catches fire happened on tapping the water – long before the shale gas was exploited.

      • Neil Craig
        Posted May 20, 2012 at 1:59 pm | Permalink

        “Just because you don’t like what someone says doesn’t make them an ecofascist. ”

        While I accept the allegation that I said that as representing the pinnacle of honesty to which you ever aspire (or any member of the “green” movement not willing to call you on it) I never did. I ask you to either link to where I did or apologise.

        If it is impossible to be certaion of the exact amount of shale gas it automatically becomes impossible for the “industry representatives” to have said that there was less than they said there was. So either way you are saying that Ed Davey is lying – and for once you appear to have said something truthful Uni.

        Regulation does not prevent one being sued – note the breast enhancement scare where companies are being sued for using enhancements which were EU approved.

        So, yet again, 100% wrong Uni.

        And incidentally an ecofascist is somebody who supports fascisim – ie massive government controls of the people and suppression of dissent, in the manner done by the BBC – justified in “environmental terms.require one to be It does not inherently require one to be a liar, though experience proves that they usually are.

  24. David John Wilson
    Posted May 18, 2012 at 12:43 pm | Permalink

    It is about time someone did something about harnessing the water energy that is available to us. There are hundreds of weirs on our rivers, many of which are capable of cost effectively generating electricity.
    The non-tidal length of the Thames has 28 weirs most of which even in the height of summer have huge amounts of water rushing over them. This could be harnessed at a seven year or better return on capital. Unlike wind and solar this energy is available 24/7. As these weirs are nearly all situated next to manned locks basic maintenance etc. would be a minor addition to the lockkeeper’s duties.

    • Mark
      Posted May 19, 2012 at 12:44 am | Permalink

      Some sums.

      From the source of the Thames near Kemble the river falls some 110 metres to the estuary. Typical flow rates vary along its length between about 17.5 m3/s at the Trout Inn, Oxford (before the Cherwell joins the Isis), and about 70 m3/s through central London.

      Using the standard physics formula E=mgh with m=50,000 kg/sec, g~= 10 m/s2 and h at 100m we get that the available power is 50 MW. In practice, the fall is more in the upper reaches where the flow is much less: the Trout Inn is at 59m above sea level according to the Ordnance Survey, so this is a generous estimate. The maximum efficiency of a turbine is governed by the Betz limit at 16/27ths (just over 59%).

      That gives a power output equivalent to less than one Rolls Royce Trent jet engine, or about 10 windmills working at maximum efficiency in ideal wind conditions.

      • Mark
        Posted May 19, 2012 at 11:25 am | Permalink

        The largest falls are at Sandford Lock and Teddington Lock – both a little under 2.7 metres, or 8’10”. That means that the weirs at Teddington might generate around 1MW – about the same power as half a dozen sporty cars.

  25. Mark
    Posted May 18, 2012 at 12:46 pm | Permalink

    I found it somewhat alarming that Sam Laidlaw announced Centrica would be increasing prices next winter for energy supplies. This implies it has already committed to higher cost supplies, or has made substantial trading losses on hedging future supplies. I can find little evidence for their assertion that wholesale gas prices are 15% higher than for last winter. NBP gas traded at around 70-75p/therm for most of the time in advance of the winter, before falling to 60p/therm during the winter because it was mild. Current prices for next winter range between 55ptherm in October and just over 70p/therm for peak demand month February. If anything, next winter’s supply should be cheaper.

    It would be useful if energy companies were required to publish their historic cost of energy acquisition over several years so that consumers could judge how skilled they were in obtaining competitively priced supply. It might also focus minds on cutting the cost of supply, rather than simply assuming consumers will pay.

    Of course, this might require that OFGEM no longer be required by law to put green issues ahead of consumer interests – as Ed Miliband enacted in the 2010 Energy Act.

    • A Different Simon
      Posted May 18, 2012 at 9:23 pm | Permalink

      Quite .

      If Centrica can get away with that then Ofgem should be disbanded because they are either totally useless or as I suspect complicit .

      Far , far too many 5th columnists in Whitehall .

      • alan jutson
        Posted May 19, 2012 at 7:35 am | Permalink

        Simon

        Agreed

        What is the point of Ofgem (or Of anything) if it cannot read a simple graph of raw material costs over the years.

  26. A Different Simon
    Posted May 18, 2012 at 1:01 pm | Permalink

    John ,

    Members of Parliament must ensure that hydraulic fracturing does not become a party political issue in the UK as it has become in Eire .

    Sinn Fein have backed themselves into a corner by adopting a closed mind towards frac’ing ; now or ever .

    It would be a disaster for the UK if for instance Labour opposed it just to court votes .

    The Govt must be consistent ; it cannot support shale up in Blackpool or the Humber Basin whilst at the same time let the affluent and influential stifle exploration for tight gas in Sussex and Surrey .

    The British people have become isolated from the industries and processes which support it’s 21st century lifestyle for so long that people oppose opening of a factory out of principle .

    It is essential that they are confronted by some of the signs of industrialisation and reminded that we cannot live in a museum if we want our lifestyle to continue .

    • Mark
      Posted May 19, 2012 at 12:10 pm | Permalink

      The South contains some interesting examples of previous developments: Humbly Grove, near Alton, is a former oilfield that is now used for gas storage; Palmer’s Wood, near Godstone is another small oilfield; and of course, Wytch Farm, where directional drilling has exploited the field with minimal impact on an area of natural beauty. Compare windmills.

      Southampton University has this fascinating page:

      http://www.southampton.ac.uk/~imw/Oil-South-of-England.htm

      Lots of photographs (including rocks that burn, wellsites, exposed cliffs) and explanation of the geology and some of the technology, as well as history of exploitation that goes back much further than you might at first suppose.

  27. A Different Simon
    Posted May 18, 2012 at 1:08 pm | Permalink

    How about rationioning of electricity all the while we have to import it or import gas to generate it to remind people that it is money going overseas ?

    When their ration runs out they have to ring up for some more at higher price .

    Imagine the average Brit’s reaction when their television stopped working .

    They might even awake from their stupor .

    • uanime5
      Posted May 18, 2012 at 7:40 pm | Permalink

      Given that the wealthy use the most electricity (larger houses cost more to heat) expect them to be the first to complain. Ironically the poorest will be the least affected.

      • Bazman
        Posted May 19, 2012 at 8:16 am | Permalink

        If you are wealthy then gas/electricity is not really that expensive as a percentage of income. Though they will be first to complain and point out as they use the most they pay the most tax. This is the burden of owning a large house that most do not understand. You do not understand. I think we should give them a subsidy to help them in the form of lower council tax.

      • lifelogic
        Posted May 19, 2012 at 1:23 pm | Permalink

        People do not usually heat large houses with electricity (other than perhaps with a heat pump rather and even then rather expensively) they use oil, gas or solid fuels.

        • Bazman
          Posted May 19, 2012 at 5:47 pm | Permalink

          Read my post. It says gas/electricity. In any case I meant home fuel sources in general. Your point is?

  28. David Langley
    Posted May 18, 2012 at 1:15 pm | Permalink

    Just had 4 bags of coal delivered £60, the coalman told me the coal comes from Columbia in South America. There is a power station in South Wales that burns anthracite, that comes from Australia.
    We are sat on a fortune, it is waiting for us to dig it up, pity about the acres of Columbia that is being ruined by open cast mining. God alone knows what goes on in Australia, seems a long way to source. When we get desperate we will no doubt go for our own stuff or are we too green and still frightened of the Miners?

  29. RDM
    Posted May 18, 2012 at 1:45 pm | Permalink

    There are so many Shale Gas, Coal Mine Gas, and Gasification opportunities within Wales and the West, where can I get startup capital from?

    Regards,

    RDM.
    Member of the un-used capacity?

    • A Different Simon
      Posted May 18, 2012 at 6:59 pm | Permalink

      Do you fancy creating a Carbon Dioxide Capture and Storage shell company with me so we can milk the £1 billion the Govt has set aside for it ?

      • lifelogic
        Posted May 19, 2012 at 1:24 pm | Permalink

        Never build a business on a “promise” from government!

  30. Derek Emery
    Posted May 18, 2012 at 2:12 pm | Permalink

    In the end there will have to be many gas power stations built in a hurry because the combined effects of political bureaucratic and planning delays mean this will be the only option because of their quick build time and cheapness. Coal fired plants will have to shut down to meet EU rules so these will be the only alternative to lights-out.

    The IMF predict that oil prices will about double by 2020 http://oilprice.com/Energy/Crude-Oil/New-IMF-Model-is-far-more-Accurate-at-Predicting-Oil-Production.html and gas prices are likely to track this.

    Combined cycle gas turbine plants are quite efficient. Having a smaller capacity is useful in that they can be dispersed through the distribution system maximising the load carrying capacity.

    I suspect nuclear will be cheaper in a decade or two’s time as the price of oil/gas will rise until out of sight. However who will be left to build nuclear power stations now Germany is closing theirs down and Hollande says he will have a program to close French reactors?

    Germany is looking into wind power. Normally this additionally requires gas-powered stations spinning continually and using gas to smooth out source fluctuations. Their engineers are looking for a totally green solution as they realise gas will become increasingly expensive and eventually unaffordable see http://www.technologyreview.com/energy/40001/page2/
    They are looking into hydrogen production and storage on a grand scale so they can cover up to many weeks of low wind speeds. German engineers are no fools.

    I think this solution would be too difficult for the UK to put in place because of the UK political bureaucratic and planning complications.

    • A Different Simon
      Posted May 18, 2012 at 7:11 pm | Permalink

      Why do you think gas will become increasingly expensive ?

      Why must we accept that the prices continually go up when the US experience has shown that they can come down ?

      The Chinese will produce some of their own where geology is suitable .
      If they can’t become self sufficient they can get LNG from Australia , US .
      If Russia’s European market dries up they can get gas from them too .

      Germany has excellent shale gas prospects in North-Rhine Westphalia .

      Spain has excellent shale gas prospects too .

      France has absolutely mind boggling quantities of shale gas , tight gas and shale oil in the Paris basin .

      Once countries start producing their own gas the price on the open market should fall shouldn’t it ?

      By the time current natural gas sources gets too expensive we’ll have either found cheaper sources or other solutions .

    • stred
      Posted May 18, 2012 at 9:12 pm | Permalink

      Hollande willnot be able to close their nuclear generation as they have too manycompetent engineers who are highly valued in government. He is atypical politician who will U turn at the first opportunity.

    • Mark
      Posted May 18, 2012 at 9:30 pm | Permalink

      It’s getting too late even for a dash for gas. We either tell the EU to stuff the LCPD, or we have power blackouts. I’ve noted lately there have been several – one interrupted the mayoral election count for several hours, and blips of a few seconds of power outage are becoming common. There is something over 12 GW of mainly coal fired capacity that must be retired by end 2015 if we follow the LCPD. That compares with typical peak demand of 55-60GW. There is just 5.5GW of CCGT under construction or planned currently.

  31. Mactheknife
    Posted May 18, 2012 at 3:51 pm | Permalink

    John

    Interesting comments on energy. However may I draw your attention to a recent conference at No 10 attended by the PM to discuss Shale Gas. A group of “experts” put the boot into Shale Gas. See more detail here:

    http://www.bishop-hill.net/blog/2012/5/18/number-10-discusses-shale-gas.html

    Now the question is who are these experts ? Well if you look on the DECC website and the meetings attended by Huhne and now Davey I assume, its the “usual suspects” that are driving our energy agenda. Yes the green lobby i.e. Greenpeace, WWF etc etc. These organisations are going to be anti-Shale because it kills their beloved wind farm religion stone dead.

    Is it government policy to let pressure groups dictate what is good for the UK economy ?

    To those of us who have followed the antics of pro-AGW “climate scientists” and their green lobby backers, it is yet another sign that they are being allowed to strangle at birth any sort of economic revovery.

    I would urge everyone to read the BishopHill blog thoroughly and look at the reports of the scientific practices being used to bolster a failing case for global warming. The latest discovery is about yet more underhand goings on with the UEA CRU “evidence” of global warming and how they omitted significant evidence from their scientific papers which would have contradicted their AGW religion.

    Read, digest, weep and hound your local MP. These people are at the heart of the IPCC, and its a national scandal that No 10 and DECC are going along with this charade.

  32. lojolondon
    Posted May 18, 2012 at 6:59 pm | Permalink

    1. Never spend another penny on ‘wind energy’
    2. Start creating nuclear power stations, many and soon
    3. Start fracking for shale gas
    4. Sit back and enjoy!

    Simples.

    • Bazman
      Posted May 18, 2012 at 9:18 pm | Permalink

      Nuclear subsides are required? Why? Fracking is expensive and much more expensive than coal or gas. Do not write about this fantasy again lojolondon unless you can come up with an answer and the rest of you nitwits. Enjoy being talked to..

      • A Different Simon
        Posted May 19, 2012 at 7:40 am | Permalink

        I’d prefer that coal was not hobbled in a deliberate attempt to make it less competitive .

        Subsidies or a guaranteed long term electricity price are required to make it worthwhile for companies to build new nuclear power station .

        Either the cost of electricity has to triple and the risk of cost overrun in the construction remain with the contractors or the cost of electricity has to double and the risk of overrun be transferred from the energy companies to the taxpayer .

        Whilst the cost of producing from a tight gas reservoirs or shale source rocks is higher than from a conventional more permeable reservoir , the finding costs are much lower .

        Is there any reason to speculate about the cost of producing these very thick shales in the UK ?
        The companies are not asking for subsidies . Just a level playing field .

  33. uanime5
    Posted May 18, 2012 at 7:43 pm | Permalink

    Given that most energy companies don’t pass on any reduction in cost to their customers cheaper energy may simply result in larger energy company profits.

    • A Different Simon
      Posted May 18, 2012 at 9:28 pm | Permalink

      There is no doubt at all that what you say is true .

      As with banking , the energy regulator Ofgem is useless at best , on the side of the existing suppliers at worst .

      The personnel at the top of Ofgem need to be replaced .
      They earn more than the PM .

  34. Bazman
    Posted May 18, 2012 at 9:11 pm | Permalink

    In a America certain economy cars by big name suppliers are not available as their MPG is to high as some Americans believe. This is because their roads are
    maintained by fuel revenues alone. How true?

  35. Bazman
    Posted May 18, 2012 at 9:42 pm | Permalink

    “If fracking was legal, nuclear power did not have so many regulations outside the M25 and gas was not wasted to stop the coal miners from being political. We have would have cheap power. This is all caused by the greens. The most controversial of laws supported by them amongst others, is the laws of physics. Many even believe energy cannot be created.

  36. Christopher Ekstrom
    Posted May 19, 2012 at 3:08 am | Permalink

    Englishmen: “…trained to Empire, trained to Rule the waves…” & now obliged to beg useless, supine bureaucrats for a few pence off energy! Why not go out with a Bang, Redwood; time to off heads. Stun the (term of abuse) & come out in the open against samcam. He’s a spineless little (spinner?). Any spirit left in the Old Boy?

  37. Neil Craig
    Posted May 22, 2012 at 12:49 pm | Permalink

    On Ed Davey’s claim, to Parliament, to the media and through a number of unoficial leaks, that at a meeting with the shale gas industry leaders they told him and Mr Cameron that their estimates of the amount if gas were false and that they needed much more government regulation.

    It definitely seems that, while not suggesting that it represents anything other than the highest standard standard of hionesty to which he and his party ever aspire, it was (untrue-ed). We still don’t know what was actually said but we do know that the industry leader was definitely not present, or even invited.

    “a comment from Cuadrilla Resources, the company that is at the forefront of efforts to develop a shale gas industry in the UK.

    No, we were not invited. Nor were we consulted about potential shale gas production in the future. I was surprised to see negative statements from people who have never seen our core data or open hole log data. They may consider getting their facts in line next time since this is such an important issue to the country.”
    http://bishophill.squarespace.com/blog/2012/5/21/cuadrilla-were-not-at-no-10-seminar.html

    Ed Davey has (apparently misled-ed) Parliament and if that is in any way wrong these days must resign. While he was simply carrying out Luddim policy of strangling the shale gas industry and anything else that might get us out of recesion, he has(spoken unwisely-ed) and thus if his own party wishes to claim any trace of honesty, they must lead the call for him to go.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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