John Redwood (Wokingham) (Con): With oil at $28 a barrel, the North sea and its supporting investments face a very damaging threat. None of us can know whether in the near future OPEC might change its policy and suddenly reduce capacity to put the price up; and none of us can know exactly when enough capacity will be closed elsewhere in the world where there are exposed investments and very high costs to get supply back into line with demand and to get the oil price higher. All we can do at the moment is try to manage what we have. Today, we have a very low oil price by recent historical standards, and it has completely undermined the business model and the investment case for many parts of the industry.
I am delighted that the Secretary of State has pledged strongly that she sees the North sea as a fundamental part of Britain’s energy requirements in the future and a fundamental part of our whole industrial base, as indeed it is. The North sea has not just spawned substantial energy reserves and large tax revenues for us, but enabled the growth of a large number of highly skilled and technical jobs, with talented people working in a large number of companies.
The Scottish Nationalists are saying, “Let us review oil taxation again and have lower rates going forward”. At the moment, as there is no revenue coming into the Treasury from North sea taxes because the oil price is so low and the investments so damaged, I am quite relaxed about that advice, and I am sure that my right hon. Friend the Chancellor will be thinking very carefully about how he can support my right hon. Friend the Secretary of State for Energy and Climate Change going forward with more investment. I have to warn Members that even if he were exceedingly generous about future rates of North sea taxation, it is not going to be enough to make a difference against the background of oil costing $28 a barrel.
What we are now battling for is not the revenues we used to get from North sea oil taxes. What we are now battling for is the very substantial income tax revenues that we have been getting, as the United Kingdom and as Scotland, from the very highly paid jobs in the Aberdeen area and the other supporting areas for the North sea. If we are not careful, $28 a barrel oil will lose a large number of those jobs—some have already gone—and flatten the incomes of many others. It will mean a very big hole in the Scottish income tax revenues on top of the damage done to the United Kingdom/Scottish revenues from the oil itself. That is why I hope that the Treasury and my right hon. Friend the Secretary of State will work with the industry to come up with any kind of scheme to give us a chance of reinvesting. We need to use the best extraction techniques and the best modern technologies. Of course we need the industry to work on its cost base, but that will require something very major.
My right hon. Friend the Secretary of State is also right that security of supply must be her single most important consideration. She is trying to balance security with costs and green issues, but I think she is right to regard security as fundamental. If there are tensions, the Government must surely put security of supply before all other considerations.
I notice that we are beginning to rely rather more in our policy on interconnectors. Let me provide a word of warning: they may provide a short-term solution, but to interconnect our supply to the continent of Europe— a continent very short of its own indigenous energy resources—does not necessarily make us more secure. Bearing in mind the importance of Russian gas throughout our continent, particularly the further east we go, I do not wish my country to be geared in the long term to an energy-short continent dependent on Russian good will. I think our security of supply must rest on indigenous UK energy resources—renewable and carbon-based in the right balance, but above all coming from generation sources that provide continuous and flexible supply.
I fully support the Bill in its wind provisions. I am a long-standing critic of wind, which I think is far too expensive. The main reason for it being far too expensive—let us be clear on the Conservative Benches, if not elsewhere in the House—is that we cannot rely on wind, requiring the building of two lots of power generation in order to be secure. There is the wind, which works sometimes, but 100% cover is necessary in many cases via other types of generation in case the wind does not blow. Given that the wind has a habit of not blowing when it is really cold and when industry might need quite a lot of energy, it is important to have that further back-up.
That brings me to the second most important proposition that my right hon. Friend has to handle, which is cost. We all witnessed an extremely sad announcement earlier today—one of a series of sad announcements about our steel industry. The Minister chided me when she said that if I believed in markets why would I want British investment projects to be buying British steel? Let me reassure Ministers that I always buy a British-made car because I live in this country. My salary here is paid from the taxes paid by people who go to work in my country, so I think it only courteous to buy some of its more expensive products when I have the money to be able to afford a car. Similarly, I like to holiday in England because it adds to the jollity of nations and provides circulation of the salary I am paid here.
I have always been someone who believes that if we live in a society or a political community, we should accept mutual obligations. I thus strongly believe that when we are voting on huge sums of money to go into very large investment programmes that have a large steel component, we should go to the next stage and say, “By the way, we want competitive British steel to be at the core”. We should be able to lay that down as a requirement. There would still be competition between the different British producers to keep them honest, but we should surely want to use our public money in that way.
Our problem on cost is that because we have so much wind in the system and we have to provide alternatives and back-up on top, the cost of our energy has become very high, which is undermining the industrial policy that my right hon. Friend the Chancellor set out in the previous Parliament seeking the march of the makers. We will get the march of the makers on the scale we want only if we offer cheap energy. Our energy needs to be cheaper than Germany’s, not dearer. It needs to be competitive with that in China and the United States of America, whereas it is far from competitive at the moment.
Modern industry is very energy intensive. It is not just the so-called energy-intensive industries that might attract some subsidy; the general process industry is energy intensive as well because it is highly automated and the grunt is now provided by electricity-driven machinery, not by human hands and arms. We need to understand that one of the core elements of any successful industrial policy must be cheap energy, so I wish my right hon. Friend every success in trying to bring together those three different components of her policy to put more emphasis on cheaper energy. To do that, we need to end these large onshore wind subsidies. To do that, we need a new generation of electricity plant that has cost as one of its main considerations. That may well be gas plant, but it will have to operate for considerable lengths of time in order to get the proper economies of scale.
The danger of the system we have inherited is that it makes sure that we pay as much as possible for energy at any given time. If very dear energy is available as wind energy, we have to run with that, which makes the cheaper energy dearer, because the base-load cannot be run any more, so the costs of switching on and off become rather large.
Three cheers for the Bill; I fully support it. Three cheers for the Secretary of State, but for goodness’ sake let us not rely on foreign supply and let us not rely on wind. Let us have some decent reliable base-load electricity at a price industry can afford.
January 20, 2016
All very well said.
I did think that oil would settle between $50 and $60 pb based on the US shale industry being the swing producer and OPEC no longer effectively functioning as a cartel. But that looks a bit high now as the US shale producers are being forced to drive down their costs to survive.
The big risk must be a supply shock from Middle East conflict or disorder as the impact of these low prices bites.
I was quite encouraged to read about the work being done on modular nuclear developments for the longer term.
January 20, 2016
@JJE; “The big risk must be a supply shock from Middle East conflict or disorder as the impact of these low prices bites.”
But there already is Middle East conflict & disorder! The new weapon is low oil prices, as I understand it much of IS’s income/wealth is apparently derived from illicit oil sales, so a lower market price per barrel is starving them of income. Whilst at least two Middle Eastern nations are about to go head to head on the supply of oil, each wishing to deprive the other of income, either by lowering the market value via ‘over supply’ and the other via previously embargoed production which also produces an over supply.
Thus trying to call the market is foolish at best, and even if the Middle East sorts its self out we still have a slowing China enjoy the ride, it could get even more bumpy for those who have a bet on future supplies and/or demand… In 12 months we could be seeing anywhere from $20 to $100 (but not above due to the economics of fracking)!
Lack of storage might drive prices higher, but it might also drive prices ridiculously cheap as refineries try to shift the product and stop having to shut down, whilst producers will still want their income flow even if reduced, will they be willing to shut down their oil fields?
All in my personal opinion of course, and with no market/industry interests to declare.
January 20, 2016
JJE ,
A swing producer is a producer which can decrease or increase production almost instantaneously – e.g. to compensate for events like Saddam Hussein setting the Kuwaiti oil fields ablaze .
Only a cartel or an authoritarian country can cut production and only a country which is not producing flat out can open the chokes further on wells which are connected and on production .
The U.S. cannot do either so it is a mistake to consider them a swing producer .
Furthermore the U.S. is the worlds biggest net importer of oil . It is importing twice what it was importing in the 1974 oil crisis .
– there are no control mechanisms in the U.S. to get the literally hundreds of independent producers to reduce production .
Many operators cannot reduce production and have to sell (albeit front loaded production) even at a big loss merely to service debt so that they don’t break bond covenants and to hold leases on a “held by production” basis .
– the U.S. cannot respond to low prices near instantaneously to dial up extra capacity instantaneously .
Yes there is a “frack-log” of drilled but uncompleted wells but these need to be hydraulically fracture stimulated and cleaned up . That takes months .
Yes U.S. onshore can respond quickly but with $100 oil and cheap money production increased at 1 million barrels a day per year . So to dial in an extra 1 million barrels a day would take a year and wellhead prices 4 times what they are now .
The U.S. light tight oil phenomenon has been fantastic and stimulated their economy far more than big offshore projects but it is not a long term replacement for large high permeability reservoirs .
January 20, 2016
One other thought – we could build a proper strategic oil reserve and fill it rather cheaply at these prices. It would be rather more useful than a gold reserve.
I believe at the moment we just tell the refiners they have to hold 60 days stock.
January 20, 2016
Indeed I wonder house cheaply/safely such large storage could be arranged. Then again the planning/approval process would probably take the government about 30 odd years – rather like a runway at Heathrow. The green loons would scream and shout nonsense as usual.
January 20, 2016
Buy cheap and pump back in to the North sea!!!
Nice natural storage…
January 20, 2016
JJE
Surely the best storage facility is already being used, and at no cost, just leave the oil in the ground and forward purchase it at todays price for later extraction/pumping,
Is that too simple a solution, or not possible.
Of course if you pay for it up front and before use, (as you would if you purchased for actual storage) you would need to be assured the company from who you were purchasing would not go bust.
January 20, 2016
@alan jutson; Surely the best storage facility is already being used, and at no cost, just leave the oil in the ground and forward purchase it at todays price for later extraction/pumping”
You assume that the business would be accepted on such a basis, what if the cost of production/extraction rose sharply for the producer nation/company, especially in some of the more volatile areas of the world – how much did it cost Kuwait to repair its oil fields after the events of 1990/1…
Oh and on your latter point, it is not just bankruptcy that needs to be guarded against but such delights as nationalisation (think Suez crisis or Hugo Chávez!), then of course there is the risk of oil fields being lost to production due to war and perhaps UN sanctions etc.
January 20, 2016
Perhaps you could ask Amber whether she thinks it is a good idea to continue with the huge expansion of offshore wind generation, as this is twice as expensive as onshore and will have very high maintenance costs. Does she think it wise to site the new windfarms in the middle of the North Sea, off the north coast of Scotland and in the Irish Sea, where severe gales and huge waves can batter structures and corrode machinery? Do the expert engineers at DECC realise that a Swedish offshore wind farm in more sheltered waters is being decommissioned after 20 years? What will be the cost if the same happens to ours?
As far as interconnectors are concerned, the proposed cables to Iceland and Norway are supposed to exchange geothermal and hydro electricity. Does she think the electricity will be supplied at an economical price, to keep the lights on and industry going? Will the cables be secure from destruction in the event of a war or terror attack. How can they be defended?
Also, how can she justify giving the order for our only new nuclear station to a French firm which has said it does not intend to build another to this design in France, but a less complicated one? And why are the Finns building a Russian design to supply electricity at half the price, after huge cost increases and delays with the French designed station they ordered years ago?
Also, which public relations firm is representing the builders of the very expensive Hinkley Point power station? Please delete this one if too embarrassing.
January 20, 2016
There is a very interesting article in the website run by Euan Mearns from Aberdeen this week. He has analysed the claims by leading warmists that the recent heavy rainfall is a result of man made climate change. He shows that similar events have happened over centuries. Why is this not taken into account by the EA and Met Office, when designing flood defences and maintaining rivers? The graphs are clear, but despite a challege, there is no answer so far from the propagandists.
He is also appealing for help to keep this important work going. If it were not for such experts spending so much time and effort, how would we know how government wastes bungles and lies about the subject.
January 20, 2016
Thanks for the reference to Euan Mearns’s website. Very interesting, even if his conclusions are not exactly what you say they are. He is mainly discussing the methodology, the role of the thresholds and other similar fine points. The subsequent discussion by contributors to his blog is also of interest.
January 21, 2016
His conclusion above Fig 4. There is no good evidence than extreme weather events are any more frequent than the were in 1766. Also the graphs illustrate other years too when extreme weather occurred too. The question about the EA and Met Office was mine.
January 20, 2016
It’s also worth keeping an eye on Paul Homewood’s site (notalotofpeopleknowthat) which specialises in debunking weather and climate myths with a combination of historical fact and rigorous analysis.
Roger Andrews did an excellent series of posts last year at Euan’s site looking at what the problems are with intermittent renewables (solar, wind, tide) – and how much storage would be required to make them useable without backup from reliable sources.
January 20, 2016
There’s a helluva fuss going on about a flood alleviation scheme around Oxford. The EA is proposing a new channel to take water around the west of the city and then back into the Thames on the south. Cost about £127million.
No-one in all the arguments seems to have asked about dredging the river. It is possible that the whole thing may not be necessary if that were to be done. How much would that cost? Someone tell me I’m entirely wrong.
January 20, 2016
The PrangWizard
They constructed a water by pass scheme like this to try and avoid Flooding Maidenhead and Bray a decade or more ago, all it did was move the problem downstream and Wraysbury, Sunbury and Chertsey got flooded instead.
Still did not take enough water away from upstream of the bypass as Purley still gets flooding.
Given that the Thames is gradually silting up along huge lengths now, I would have thought dredging From Richmond (Tidal) and Teddington (half tidal) and working your way upstream would have been the sensible choice.
Clearly they know better.
January 20, 2016
Alan, sensible??? That’s a foreign language where Dave is concerned.
January 21, 2016
Well, that wasn’t all that it did, because it did save some areas of Maidenhead from flooding as they used to.
January 20, 2016
Dear Prang–What about the locks?–Two very close to the Town–How dredge through them? Individual channels round each doesn’t sound realistic. Apart from lesser matters, the Red Flag preventing rowing (when high water deemed dangerous) flies much too often these days.
January 21, 2016
Indeed all good questions, but does Rudd (or her recent predecessors) think rationally at all? Would you fly on a plane designed by PPE or History graduates?
January 20, 2016
Mr Redwood, well said. I read through the excellent speech and could see that you were hitting the nail on the head every single time.
What you were, however, doing was attacking the Green Blob. Everyone knows (do they not?) that fracking is immoral and dangerous. Everybody knows that Global Warming/Climate change is caused by man made carbon emissions due to human greed. Everyone knows that wind and renewables are the way forward as enshrined in European and British Law. It therefore makes sense to clean up our act and to buy in energy from Russia. Too bad about the steel/aluminium industries and the other industries that will have to move abroad.
You are attacking that sacred belief system.
Well done! And about time too.
January 20, 2016
Similar arguments can be made for steel. That it won’t always be cheap – yet we are allowing skilled jobs (and allied communities) to be lost because of a glut in that industry too.
One thing. It’s certainly not worth assigning engineering trains, organising expensive and disruptive line blockages and taking work gangs from essential projects to pick up steel from around railway tracks when it’s value is at such low prices. Those resources would be better deployed cutting back large trees and getting rid of level crossings that are a threat to train travel.
January 20, 2016
Solar yes wind no. Wind is and never will be a viable option as the price of it is far too high and it is too unreliable. Solar on the other hand is very likely not going to need subsidising for much longer but alas that has reliability problems because it rely’s on the sun. Pollution and man made damage to our environment we have plenty of and that is something we do need to do something about. Man made climate change however there is not the evidence and what evidence there is being rapidly discredited we need not do much about.
Energy policy alone is not destroying out manufacturing base or parts of it although it is a major factor. Other factors are at work that are aiding that by ensuring higher unit costs than our competitors. Energy policies, rules, regulations and laws if continued to be pursued as they have been by both the UK government and the EU will in the end destroy much more of our manufacturing base.
I believe this to be obvious and self evident yet we blindly tread the same path because eco-loons and technocrats tell us me must. They are either well intentioned fools or care not that the private sector is suffering as they are not employed in it but in the public sector.
If we are going to improve our manufacturing industries then we need to leave the EU so that we can pursue our own policies and practices. At the same time make sure that those policies and practices are not in the least way influenced by the Greens and all the other lefties who currently are doing so much damage because of that influence.
January 20, 2016
Solar panels are about as cheap as they’ll ever be due to a massive surplus of production capacity in China that has resulted in disposals of bankrupt stocks: it isn’t the cost of panels that is the issue, but the cost of installation and of the inverter and associated electronics and maintenance to keep the panels clean (they become much less efficient if this is not done regularly), and the complications of incorporating solar output on larger scales into general electricity supply, since its peak output at midday in midsummer results in surplus power that has to be dumped (in Germany this causes wholesale power prices to go negative at times), while it produces nothing when demand is at its highest in a dark winter rush hour, so you still need full back up from dispatchable power sources – which really should be added to the cost of the solar.
If solar makes sense anywhere it is in hot, tropical climates, where power demand is dominated by air conditioning, and is much more synchronous with the sun, and where there is much less variation in output and demand across the seasons.
January 21, 2016
Well if and when PV is ever competitive in the cloudy UK it will sell with no need for any subsidy, currently it is farm far away from that. Especially given its intermittent nature and the fact they you get most of the production in the middle of the summer days just when demand is very low.
January 20, 2016
Indeed let us have some decent reliable base-load electricity at a price industry can afford – so that means Coal and Gas – the ones Rudd and the government has been closing down.
Wind, biofuels and PV were always an economic nonsense, even at the old high oil and gas prices. A pathetic, political religion and childish “virtue signalling” by the husky hugging PR types.
Given this cheap energy and steel we should be using it to build more infrastructure, houses, flats, homes, roads, runways at Heathrow and Gatwick. Get the government and planning process out of the way and get on with it. We can easily afford it if we get rid of the very many over paid people “working” in the state sector who produce nothing of any value (and often worse that nothing).
January 20, 2016
All good points JR, but one is forced to ask.
If oil price is too high, it means problems.
If oil price is too low, it means problems.
What would be the correct/right price of oil, that would satisfy everybody ?
Indeed, is it possible to satisfy everyone ?
OPEC used to play a role in attempting to stabilise the oil price with agreed extraction limits at one time, have they not now got the influence they once had due to wars, and production/extraction happening elsewhere in the World.
January 20, 2016
Low Oil, Gas and commodity prices are great news for most people and for the UK in general. Did the green loons/soothsayers not predict oil was all going to run out in about 1995 or something? Why do so many (and the BBC) still listen to these daft, proven wrong, green high priests rather than some solid engineers and scientists?
January 20, 2016
Alan Jutson ,
Demand destruction sets in at about $90/bbl .
At the margin of the the 95 million barrels a day the world consumes the full cycle cost is reckoned to be about $80/bbl .
The Saudi’s are carrying out an experiment to find out better what this is .
Many oil producing countries require more than $80 to balance their budgets and are now distressed ; Venezuela , Nigeria , Russia etc .
Exploration was in aggregate a loss making activity for at least the last decade . Consequently major oil companies have failed to replace their reserves .
The only non-Opec production which has increased over the last decade has been light tight oil in the U.S. and Canada and bitumen from Athabasca tar sands .
It is hard to justify investment when prices are so low but failure to invest is likely to result in supply shocks a couple of years hence .
The U.K. must urgently investigate it’s shale gas and consider converting trucks from imported diesel to compressed natural gas .
January 20, 2016
Contingency plans still not available other than dependency on others. Brilliant…NOT!
Good luck with that British car thing. Mercedes just got 50k of my sons money despite all my arguments. They were very, very eager to get it!
All well said and thank you. The next Govt will flip any of that around I suspect….as usual.
Sarah Palin..not sure whether thats good or bad? Am on the bad side at the moment but I think the BBC is shortly to do some bad work on the topic…something about Trump Paranoia blurted out on the World Service last night. More sewage from them I suspect.
January 20, 2016
Just off-topic but the USA has a really dismal choice in the Presidential election – Mrs Clinton and Bernie “Corbyn” Sanders on the one side and Trump/Palin and Cruz on the other – I hope they have “None of the above” on the ballot paper.
On energy prices, it is certainly very strange that wholesale energy prices have crashed through the floor by my energy bills haven’t. I understand all about them having long-term supply contracts and hedging against price and currency movements but it looks to me like simple profiteering abusing their dominant market position – I imagine plenty of people are coming around to Corby’s “nationalise them all” idea.
January 20, 2016
If you look at OFGEM’s “Supply Market Indicator” that supposedly looks at the costs that energy suppliers face you will discover that it assumes that commodity costs are hedged 12-18 months forward.
https://www.ofgem.gov.uk/publications-and-updates/methodology-supply-market-indicator
OFGEM are themselves responsible for prices not falling, since companies have modelled their behaviour on the assumptions behind the the SMI, and therefore we will only see the full benefit of lower commodity prices a long way into the future. In the mean time, they are encouraged by the methodology to assume rising forward costs for things like green taxes, extra costs of power distribution as more wind farms are connected to the grid, etc.
I hope the CMA will take the time to highlight this anticompetitive pricing behaviour marker, and encourage OFGEM to abandon it in favour of looking at shorter term pricing and costs.
One of the problems is that it allows the providers of hedges to profit from and entirely predictable demand to buy forward hedges, which becomes profitable business for banks, and higher prices for consumers. Forward hedging should be consumer driven: if a consumer hedges forward, and prices fall, they only have themselves to blame. If a consumer fails to hedge and prices rise – likewise. Consumers should understand that hedging will tend to be more expensive over time, and should be reserved only for those occasions where they feel reasonably certain of sustained commodity price increases.
January 20, 2016
Whilst fossil fuels have gone down the cost of renewables are rising out of control so our bills will never go down as they are more expensive than conventional energy. We are not going to see lower prices all the time we are funding expensive renewables. It has been reported today that one in eight people in Scotland cannot afford to switch on their heating in their living areas during the day. (Daily Mail today.)
January 20, 2016
JR, I thoroughly endorse all the points you made in this speech – how I wish there were more such clear-headed MPs.
January 21, 2016
More than clear-headed, sm. JR is demonstrably ethical and patriotic, A genuinely honourable man. A rarity in this world.
January 20, 2016
Brilliant piece John I just hope more of the House takes it on board.
Will not be holding my breath!!!
Wait until the COP 21 agreements kick in.
Our energy policies are bordering on the politics of the madhouse.
What is really sad and frightening is that there still only seems to be 100 odd in the chamber that understand what you are saying.
January 20, 2016
$28 oil is remarkable as it is another example of a consensus of experts being proven completely wrong. An unfortunate example for us UK taxpayers is the lamentable former energy secretary Ed Davey, who committed to investments on our behalf in green and nuclear energy predicated on an assumption of rising oil prices going to c. $140.
At a more parochial level it makes complete fools of the Scottish separatists, all of whose economic plans were based on oil at $100 or so.
(I note recent research explains that the 9,000 billion tonnes of ice which Greenland has apparently lost over the last 115 years is in fact 0.3% of the total – meaning 99.7% of Greenland’s ice is still there. At this rate we must wait 33,000 years for an ice free Greenland.)
January 20, 2016
Dr JR- `a very coherent and extremely well structured speech . I did not witness it so I am thankful you decided to post it . The components of readily available and cost effective energy are of basic importance to our manufacturing industries and the Government ought to keep these perspectives very much in mind . I do not have faith in our present system of watch and control of energy resources mainly because they are dealt with as short term issues ; energy planning is a long term consideration well beyond the 5 year election factor .
We are witnessing a fair degree of international market turmoil influenced by the cost of oil and the knock-on effect to consumers , manufacturers and investors alike ; the solution in restoring the necessary balance lies in a high degree of international rather than local national effort . I would like to have Dr JR’s views on how he sees this being put to rights .
January 20, 2016
Great contribution John. Well done. Another good one from Roger Helmer too.
The recent Paris climate conference urged electrification on a scale that would require at least three Terawatts of extra generating capacity in the UK. That’s 750 Drax-sized power stations, or 1½ million wind turbines. Lunacy, or what? The following analysis was undertaken by climate warrior Philip Foster, who organised the fringe meeting which I attended in Paris alongside COP21.
The Paris climate conference urged that all home heating should move away from gas to be all electric. Just how realistic is this for the UK?
There are around 16 million (16 × 10^6) households connected to the gas grid network in the UK. The average household boiler is rated at 60 kiloWatt. To replace that with electric home heating would still require about the same electrical capacity. (Remember even a single electric shower is 7 kW, and an oven approaching 10 kW).
Here‘s the arithmetic: 16 × 10^6 × 60 kW = 96 × 10^7 =~ 100 × 10^7 = 10^9 kW = 10^6 MegaW = 10^3 GigaW or about 1 TeraW of extra power.
Drax (which was our biggest and most efficient coal fired power station) generates about 4 GW, therefore to generate this extra 1 TW we would need to build about 250 Drax sized power stations, or erect half a million 5 MW (in reality, 2 MW) wind turbines [for reference: current average requirement in the UK is a mere 40 GW, that is 0.04 TW].
Now let‘s go to COP21‘s second idea that all cars should be electric. In the UK there are about 35 million cars (just over double the number of households). 1 Horsepower is about 750 W. So an average 100 HP car engine = 75 kW (marginally more than the average household boiler).
This means we need, not just 1 TW extra electric power to charge up these vehicles, but more than 2 TW. That is 500 Drax sized power stations or one million wind turbines.
Combining household heating with electric cars the UK would need an extra 3 TW of generating power.
Although, arguably, the 3 TW are not always needed, they will be, frequently so, around 5-6pm on a weekday. People return home, plug their cars, switch on their heating, and start cooking – all on electric.
So COP21 is asking the UK to build 750 more Drax sized power stations (think of the US forests this would require now that Drax has gone bio-mass), or 1.5 million more wind turbines. And, of course, we would need to completely rebuild the electricity Grid to take this nearly 75 fold increase in load. Also every street in the UK will need to be dug up to install much higher capacity cabling.
I‘m not sure the English language has a word strong enough to describe this. It‘s beyond insanity.
January 21, 2016
Surely all 16 milion domestic boilers aren’t running full out at the same time, nor are all 35 million cars running at full hp at the same time? Cars would run on batteries and further spread out demand. Required additional generating capacity would be somewhat lower estimate.
January 20, 2016
On the coldest night of the year, so far, with obviously NO solar energy, and almost ZERO renewables. Where are we getting the GAS to generate our electricity from ? Russia, or fracking ? And when we can’t use gas for our central heating and fuel (See Climate Change Act) where do we get our energy from ? Import wood chips from California for use in our (EU enforced) reduced number of Power Stations? Best get the Chinese (and EDF) to build us a Nuclear generator at a strike price that makes the eyes water !
Typical EU joined-up thinking. Oh I forget, we have STOR – diesel generated backup at massive expense…. What a legacy for our children and theirs…..
http://www.gridwatch.templar.co.uk/
last night at 20:00 was showing wind contribution as 0.16% !
January 20, 2016
Our gas comes from our diminishing North Sea production, imports from Norway, imports of LNG primarily from Qatar, and small quantities (not always available when there is a shortage of supply) via the pipelines from the Netherlands and Belgium which were originally used to export gas surplus landed in the UK (and still are used to export gas to the Continent when they are short – taking advantage of the LNG terminals we have that can land extra quantities).
January 20, 2016
I expect all the problems you describe will not be addressed because the Civil-Service promotion scheme has guaranteed that only ‘Greenies’ have got to the top over the last couple of decades. And in the EU the German ‘Greens’ have been in charge for years and years…
January 20, 2016
To be “green”, in the sense of environmental awareness, is one thing. And a good thing, if not pushed beyond reasonable limits. To be “Green” in the sense of utter economic naïveté is another altogether. Europe is typically of the latter stripe, and we have also been infected . I fear for the consequences of long term decision making based upon ideological commitments. It will condemn us to the energy resources of the Anglo Saxons. Great for jewellery; less great for industry.
January 20, 2016
Worse than the 1960s for young intelligent people in the UK. Then the Establishment put to them contradictory information about the USSR and Communism. Without old heads, seeing their country was telling deliberate lies to them, some became various hues of anarchist even joining the Tory Party.
Now the USSR is dead. Communism and Socialism have even longer grey beards but with rich well-shod Marxists riding bicycles on dangerous London streets. Yet Russia remains the enemy. Gosh we were told it was because of the red colour of her flag.
The UK has all kinds of excuses for being an ally of Saudi Arabia,(various generalised allegations deleted ed).
You mention JR you do not want an energy policy in our continent based on Russian goodwill.
A young intelligent person can be forgiven for not being able to quite see the case against Russia compared to Saudi Arabia and her (questionable ed) Middle Eastern and African allies.
Also in the space of a week Mr Osborne has gone suddenly from optimism to pessimism about our economy with the SNP highlighting albeit in a strawman argument that the OBR predicted a very high price for oil. Didn’t Saudi Arabia advise the OBR otherwise? For all their many many sins they know a thing or two about the oil industry.
The truth is, the UK government is in economic and political disarray that has not been seen since the prelude to World War Two. Its allies are unreliable. Europe is in political and economic chaos. Has a population whose identity and loyalty is in question.
as Rt Hon Theresa May said in Parliament very recently: “We know 800 British people went to join ISIS in Syria. We know 400 have returned to the UK.” Actually she thinks those are the numbers. A major UK crisis indeed that the Home Secretary admits openly there are potentially 400 terrorists on our soil.
So Parliament has been discussing energy policy…along with at the highest level of interaction a Minister’s April 1st birthday and the massively geo-political problem of his pink shirt.
Parliament has let British young people down and anyone else hoping for a jot of maturity and sensible thought.
Reply I do not seek UK dependence on Saudi oil rather than Russian gas. I want security from domestic supply. Parliament has discussed the issues you raise at considerable length as well as energy policy!
January 20, 2016
The UK Government has the Minster of Health; Mayor of London, the Prime Minister; Shadow Defence Minister and the Leader of HM Opposition demonstrating they know absolutely nothing about commonsense safety by refraining to ride a bicycle on the most dangerous streets in the world ( London )
JR: are there any adults in Parliament? Wouldn’t it be better to discuss matters of importance with grown-ups?
January 20, 2016
Fossil fuels at their cheapest for years and still stupid Rudd goes ahead shutting down cheap and efficient coal power stations.
Now we are signed up for outlawing gas boilers and gas fired power stations to meet spurious COP21 commitments.
This would entail us building about 300GW of generation when we cannot get 10GW of nuclear off the ground.
Not to mention that electricity is 4 times as expensive as gas and less efficient due to transmission losses etc.
I bet you are all congratulating yourselves on the steel workers redundancies as yet another CO2 emitting industry is forced offshore.
Never mind the lives of thousand of steel workers as long as the green blob is happy.
I see Brussels is tearing up the Dublin agreement no doubt at Germanys insistence and we are to be blackmailed into accepting thousands of(words left out ed) refugees.
Where does that sit with Daves renegotiations??
January 20, 2016
One wonders at out Intelligence Agency protecting MPs. What does MI6 or whatever they’re called advise for the personal security of bicycle-riding MPs? Tungsten reinforced mud-guards? Perhaps a john Cleese laser beam triggered by turning on a bike-lamp. Of course not. The bike-lamp ENERGY is not run off battery nowadays but by pedal power. A cunning plan needs to be developed at the highest level…perhaps stepping into a lift, to think of a way of generating ENERGY in daylight hours to the bike lamp without revealing ones armaments to the ENEMY. Otherwise those bicycles may be nicknamed two-wheeled-vanguard-class sit up and begs….unless the handlebars are dipped racer-style of course.
January 20, 2016
You make excellent points. Let us hope the Secretary of State acts on them.
I have a couple of observations. The first is that you might have made more of the ways the recent bidding process for reserve energy capacity was skewed by the current regulatory framework. As I understand it they effectively precluded the building of efficient gas fired generating capacity. Instead we will be/are saddled with relatively small scale, diesel generated emergency capacity. I do not have the numbers (£ per unit) to hand, but it would be worth bringing them to wider attention as well as the astronomically high prices charged when such emergency capacity is required after the renewable sources fail to deliver.
The second is I believe that the UK has entered into long term supply contracts with Norway (oil and gas) and also with Qatar (LPG) in part to avoid being in Putin’s pocket. I imagine that these would remain even if it proved possible to develop a UK fracking industry – assuming that it could be cost competitive with the regulatory framework that it must comply with. My recollection is that when the House of Lords enquired into the matter (and when oil was $100+), a leading US fracking entrepreneur said that the UK was not an attractive option for someone like him. At today’s prices it must be even less attractive. It is not at all obvious to me that the changes you rightly seek in energy policy will be possible while the Green Blob continues to exercise its baleful influence over government policy. I remain to be convinced that the mindset exists, or is allowed to exist, inside DECC to achieve the root and branch reform that the country needs.
January 21, 2016
Norway has some flexibility to route gas we don’t need from them to the Continent instead (should we ever get to that position again), and we can re-export it via the gas pipelines to Belgium and Holland. LNG we don’t need can easily be on-sold to any customer that can take an LNG shipment. If we get a global gas glut, it will be LNG plants where supply is cut back other things being equal, as the cost of getting gas to customers is high because of shipping and liquefaction.
January 20, 2016
I’m pretty sure that Parliament has told the government that they cannot give preference to UK steelmakers or other suppliers for public projects unless they have first sought and obtained permission from the EU Commission. Is that not correct?
(I put it like that because it is our supreme legal authority, Parliament, rather than the government, which has passed the European Communities Act 1972 and subsequent Acts laying down that everyone in the UK, including all public authorities, must obey the EU treaties and whatever laws may spring from them.)
In any case these future projects may be helpful to the steel industry in the UK, if the contracts have not already been signed to use imported steel, but that is in the longer term and does not address the immediate problems that the Chinese are dumping their massive surpluses of steel onto the world markets and the EU Commission has not yet acted to protect steelmakers in the EU from going bust as a result, and that the energy costs of the steel industry in the UK, and indeed of all other industries in the UK, have been deliberately inflated by the application of EU policies.
January 20, 2016
“I’m pretty sure that Parliament has told the government that they cannot give preference to UK steelmakers or other suppliers for public projects unless they have first sought and obtained permission from the EU Commission. Is that not correct?”
“The EU opened an inquiry on Wednesday into Italian state aid for the struggling Ilva steel works, the largest in the bloc and one of its most polluting, the European Commission said.
The European Commission separately on Wednesday ordered Belgium to recover €211 million from steel companies within the Duferco group, the second judgment in a matter of weeks against the country.”
http://www.thelocal.it/20160120/eu-opens-probe-into-italian-aid-for-polluting-ilva-steelworks
January 20, 2016
With the oil price hovering at $30 a barrel, what should the price of petrol be at the pumps?
January 20, 2016
x + 58p = £1.00
In other words, the declining oil price is far more important to oil workers than to those who buy their heavily taxed products, so it’s not a quid pro quo between loss of jobs in oil and gain of jobs in the wider economy.
January 20, 2016
5P/6-58 gives retail pre-tax petrol (or DERV) price in ppl (you forgot the VAT). Subtract distribution and retailing costs (which vary according to location, size of petrol station etc.) to get wholesale price. Convert to US cents per litre using £/$ rate, and to $/tonne by multiplying the result by 12 for DERV and 13.5 for petrol. Compare with quoted Rotterdam price.
January 20, 2016
Fracking, John?? One of the main reasons for the depressed price of oil is the USA’s fracking programme, which results in the USA no longer being a nett importer of crude. A fantastic achievement and one that the British economy would do well to emulate, imagine the result on our balance of payments!
January 20, 2016
hear,hear,hear, hear………………………………..Shame this isn’t the voice of David Cameron!
January 20, 2016
Lojolondon ,
The U.S. is still the Worlds biggest importer of oil .
This is not just down to the blend of oil required by their refineries .
Imports are now twice what they were at the time of the 1974 oil crisis .
What has been achieved in the light tight oil patch has been tremendous achievement but let’s not promote it beyond reality .
The Picken’s Plan calls for substitution of natural gas for diesel in U.S. trucks .
J.R. , one thing to remember about U.S. LNG exports is that much of the gas is “associated gas” , i.e. a co-product of light tight oil production .
If the production of light tight oil decreases there will be less associated gas , and the price of LNG will increase and the U.S. Administration may even reverse it’s policy on allowing LNG exports .
January 20, 2016
Off topic but I would be grateful if you would respond.
I have had a publication pushed through the door which states 6 reasons for staying in the EU.
1) Over 3 million jobs are linked to our trade with the EU. That’s 1:10 jobs.
2) Being in the EU means lower prices in our shops.. saving £450/ PA
3) While being in the EU costs each household less than a pound a day, independent experts estimate the benefits are worth £ 3000/ PA to the average household
4) We are safer thanks to the European arrest warrant.
5) 200.000 uk businesses trade with the EU helping them create UK jobs
6) The UK gets 66 million of investment every day from EU countries.
Also Sir Hugh Orde is quoted as saying because we can share intelligence we are safer in the EU
Reply 3 m jobs are not at risk, food prices would be lower out of the EU, we will be £10 bn better off each year (£300 a family), we will have an extradition arrangement with the EU as we do with the US, our trade is not at risk, and investment will still have to flow into the UK all the time we run a balance of payments deficit.
January 20, 2016
Margaret
Its the usual lies.
They are now starting to appear on Social media sites as well, fortunately some knowledgeable people are commenting on the content with logical argument for leaving.
Makes the original posters all look rather silly, but unfortunately many people will not look further than the headlines and will be thus conned.
January 20, 2016
“I have had a publication pushed through the door which states 6 reasons for staying in the EU.”
I saw a copy at a friend’s house and it is a pack of lies from front to back which is quite reassuring because it means the Inners have no genuine arguments for staying in whatsoever. All they can do is spread FearUncertaintyDoubt (FUD).
January 20, 2016
They can’t stop the bad news being shown on the BBC – about millions of pushy young blokes forcing their way through European borders to get here… or can they ???
Expect a news blackout on that issue closer to the referendum.
Britain is becoming sovietised.
There really ought to be an address to the nation on European immigration, how much it will impact on us and why we must have it. It would be polite to inform us of the drastic changes to come.
Alas that’s not the sort of country we live in. The lie and lie and lie.
January 21, 2016
Exactly. A pack of lies we are certainly better of out economically, but even more importantly we retain our democracy.
January 20, 2016
Off Topic:
MPs as I type, including the salaried Minister responsible, are busily further identifying and broadcasting via BBC Parliament “Treatment of Asylum Seekers Question” an already published and distributed article in the Times relating to a means, otherwise totally unknown to large numbers of our population, by which Asylum Seekers homes can be picked out from other residents.
Why does not a British newspaper, consult with Constituency MPs in question, prior to their traditional need to report sensationalist news.? Has the Times committed a crime by primarily identifying Asylum Seeker homes? Have MPs by public discussion added to possible danger? Have they collectively and individually engaged in criminality? Can they be said to “not know what they do? ”
One MP suggested work relating to rectifying the identifying constructions on Asylum Seeker homes should not have to wait the 4-6 weeks as anticipated but should be done immediately “by the end of the week”. Well, the particular changes might very well require dry weather for the glue… as it were to stick properly. Something the MP did not seem to understand. Perhaps he is an excellent weather forecaster. Perhaps none of the neighbours, none of the contractors, their families, the contractors administrative staff nor scores of people in Social Services, Housing Departments, Resident Associations, Housing Associations, postal workers, window cleaners, road workers, milkmen,- will notice a change in certain buildings, suddenly, to the exclusion of one particular type of glue, so to speak )
The UK Parliament is a wonder.
January 20, 2016
Off-topic, many contributors to this blog are highly critical of the BBC, and less so of the other broadcasters, but what about this headline from ITV this morning?
http://www.itv.com/news/2016-01-20/will-new-eu-migrant-rules-be-good-or-bad-for-uk/
“Would new EU migrant rules be good or bad for UK?”
When it turns out further in the article that what is actually meant is this:
“Europhile Brits – and they are pretty much the only Brits who bowl up here – are not sure whether this attempt to impose a more equitable and rational distribution of migrants throughout Europe is good or bad for their case that the UK should stay in the EU.”
OK, so it written by Robert Peston.
January 20, 2016
Given that the UK is one of the largest contributors to international development aid by percentage of GDP, it is reasonable to ask why immigration should become our problem. Perhaps our government needs to reallocate its aid budget, but this current free for all is absurd. If everyone that wishes to leave their homeland and head for greener pastures is able to accomplish their objectives, there are no limits to the scale of the problem or to the volume of migrants. Is there a point at which European countries will say: enough already? Isn’t the answer to rebuild in the Middle East and North Africa that which we have so wantonly destroyed, rather than to acquiesce in fostering a northwards human migration without limit?
Of course, the liberal media has already voted for a human phenomenon they haven’t thought through…
January 20, 2016
I really wish all MPs led by example.
January 20, 2016
Particularly on using very ordinary schools for their children.
January 20, 2016
“the base-load cannot be run any more”
No. The expensive intermittant renewables are the new base load. The original base load is now deprecated and in the process of being shut down; it’s pure sabotage, it couldn’t be anything else.
January 20, 2016
“The Ulster Farmers’ Union (UFU) will not be hurried into a policy decision regarding its stance on whether or not the UK should stay in the European Union, according to the organisation’s chief executive Wesley Aston.
“We are coming under pressure from organisations, such as the CBI, to declare our hand now in favour of the status quo,” he said.”
http://www.farminglife.com/news/farming-news/ufu-will-not-declare-its-hand-yet-on-a-brexit-1-7170648
January 20, 2016
What “status quo” would that be?
The “status quo” now is radically different from the “status quo” forty years ago when we last had a direct say on it, what will be the “status quo” in another forty years?
Start with a few basics, such as “How many member states will there be?”, and it turns out that the enthusiasts for the EU “status quo” have no answers.
January 20, 2016
Very interesting link here from the GWPF. It states that our injection of CO2 into the atmosphere has put off another ice age. It has been vindicated.
http://www.thegwpf.com/sir-fred-hoyle-vindicated-co2-emissions-may-delay-ice-age/
January 20, 2016
In the interests of equality, which is something the Marxist SNP should have great interest in, why not have a UN body that controls all the worlds oil as a global resource, rather than allowing it to be in the hands of oligarchs and sheikhs.
words left out ed
The UN body could administer the revenues of oil use more equitably and in less anti-Capitalist way, perhaps by funding science and medicine around the world.
January 20, 2016
Off-topic, but supposing you lived in an house with a red door, and houses with red doors in your street were being attacked, would your response be:
a/ sit in your house, moan a lot, and wait for something to be done or
b/ paint your door any colour but red?
January 20, 2016
Stred “Perhaps you could ask Amber whether she thinks it is a good idea to continue with the huge expansion of offshore wind generation, as this is twice as expensive as onshore and will have very high maintenance costs. ”
This question would be better phrased as shouldn’t Amber just say NO to more wind wherever it be sited??
Wind is intermittent and when we need it most provides virtually nothing in cold still weather. We need proper energy production like gas, nuclear and coal. Let’s not forget that wind turbines have a very short lifespan.
January 20, 2016
The answer lies in the atom. It’s time for a renewed commitment to nuclear energy in both R&D and generation. We should aim to become a world leader in safer nuclear power over the next 25 years. We must put the 1970s and 80s behind us.
At Britain’s latitude, and with its perennial cloud cover, solar is a joke, and wind is an marginal contributor at best. We need to be thinking of the long term: to achieve energy independence, consistency of supply, and stable pricing. The capital costs will be an investment in future energy security. We will not be thanked by future generations who will have to grapple with the challenges of energy supply without the requisite tools in place. This is a multi-generational project.
January 20, 2016
OT question to JR please:
In the light of the recent debate in Westminster about the use of poppers, could you please comment on why this self-evidently health and safety issue either is or is not something that is or should be decided by the EU and not our own parliament?
Thanks.
January 20, 2016
BBC news tonight was like televised mental illness, again. It was announced, factually, at the start of the show that global markets fell today due to falling oil prices. There is no way of them to know why markets move, nor do they know why the climate moves. It is the intellectual equivalent of palm reading or crystal ball gazing.
They then creepily linked it to a no vote in the EU referendum.
I ask any of you what is the future for humanity is if this level of propaganda is already considered acceptable in a world leading media organisation. 100 years from now it will just be Pravda.
Please get them to report actual news.
Falling energy prices are good for the economy anyway. This is the same organisation that was claiming several years ago that a $140 barrel of oil was the new normal. That reported fact was wrong as well.
January 20, 2016
Foreign supply via interconnectors is in any case unreliable. In the past 24 hours we have seen a swing between importing 3GW in the middle of the night and exporting 1.5GW to meet the rush hour demand on the Continent at around 4 o’clock our time. It’s like the old joke about bankers only ever offering you an umbrella when it’s sunny, and demanding it back when it rains. Such swings are even bigger than the difference between typical wind output and the close to zero output we’ve seen under the still winter blocking high (which of course also affects the Continent, explaining why they need a rush hour top-up from us since their own windmills and solar failed them too).