Friday 24 June 2011

Energy Update: Pulling The Oily Levers

There is a lot happening in energy just now, not least in the UK where Ofgem is vainly lashing out in all directions: but the policy contradictions are beginning to become so evident that something will have to give.

And the sooner the better: the 'Big 6' suppliers who make such convenient punchbags for politicians are being squeezed from all directions and their patience is thinning by the month. There is no way they can be leaned on for £200 billion of capex for 'decarbonisation', and yet be beaten up on every occasion. As we've said many times before, the official way of squaring this circle - increase electricity prices so much that everyone can be bought off with subsidies - falls at the twin hurdles of (a) industrial companies packing up and emigrating, and (b) the general inflationary impact.

But today we must focus on the great opening of the oil floodgates announced by the IEA. What do we make of this ?

Well firstly, note that Brent is still in 3 figures: and if that's how OPEC likes it, believe me OPEC can keep it there. The Saudis may have been increasing production a little of late, but here we have a nation that is investing in solar and nuclear as fast as anyone will sell them the kit, which kinda tells us something ...

Secondly, it is not hard to detect the increasingly confident, if not competent Hand of Obama in this. Perhaps, as some have suggested, this is the opening salvo of QE3-in-disguise. Personally, I think the oil measure alone would not have the longer-term effect he's hoping for, but we shall see because it does at least remind us that the Big Boys have several Big Levers they can pull.

And pull them they will, because things are looking truly awful at the moment, are they not ?

Which brings me to an uncomfortable conclusion. Back here in Blighty, I look at Cameron and Osborne and I don't see men who know how to pull the levers. They don't seem to have the creativity for it, or the vision. I'm not even sure they know where the levers are. Mandelson, and even Balls - they know how these things are done. Cameron just stands blinking at the cameras, saying that the nice Mrs Merkel has promised him no-one will be asking us for any Greek bail-out money. (Does he have a piece of paper from her, I wonder ...) Pathetic.

When the incoming Conservative government took Sterling off the gold standard in 1931, a former Labour cabinet minister (history is divided as to which one) said: they never told us we could do that !

The hour needs to call forth the man. He seems to be hiding his light under a bushel just now.

ND

14 comments:

Old BE said...

"I don't see men who know how to pull the levers"

I was really pro-Cameron but in the last month or two his lack of clothes have become apparent even to me.

Demetrius said...

Where is Stanley Baldwin when you need him?

Anonymous said...

I'm not even sure they know where the levers are. Mandelson, and even Balls - they know how these things are done.

Well, Mandy and Balls have plenty of practice at pulling levers, probably no one has told Cameron how to pull the levers, maybe frightened in casr he pulls the wrong one.

Anonymous said...

'Call me Dave' Dave won't pull anything until he's given the nod by Barroso.

I'd love the know what capital protection plans the 20+ millionaires in the Condem cabinet are using right now. I expect most will be unobtainable by the 'little people' so despised by the elite.

Elby the Beserk said...

It took me 40 years to vote Conservative, and, as matters stand, I can't see myself doing it again. Indeed, for all his chippiness, Farage's UKIP is increasingly looking to be the home for this pissed off voter, if just for their stance on the EU and local democracy.

I would add that along the way it has been a pleasure to hook up with so many right of centre bloggers. Kudos to you all. And lets us know if you are up this way at any time, ND - there will be a cider awaiting you and
your better half :-) (I do remember her name but am invoking data privacy rules!)

@ANON. You should know that, pre capita, both Labour and the Conservatives have the same percentage of millionaires in their ranks. And the wealthiest MP is a Labour MP. Nice try tho'

Elby the Beserk said...

more for Anon - and what is wring with having people in the Cabinet who know how to make money, rather than how to spend money - that they don't even have. Doh.

Anonymous said...

I'm no fan of Cameron.

But really, how can you possibly give any credibility to Balls?
He seems to just want to keep borrowing and borrowing until we go over the edge.

Anonymous said...

If we hadn't gone off the gold standard we wouldn't be in the mess we are in now.

Nick Drew said...

Gold standard - a contentious matter around these parts ... (but I agree with you)

Elby - may very well be up for that, details to follow via the usual channels: regards to all

as regards Balls - yes, a loathsome little twat: but a genuine strategist nonetheless (see those papers leaked by the DTel recently) - I've met many a politician (and some Generals, come to that) who don't have an ounce of his natural talent in that direction

Kev, straight to the point as ever & you may indeed be right

BE I am feeling much the same way: it's not the U-turns particularly, but it's starting to add up to something ... inadequate. His 'stance' on the Greece thing is truly, truly pathetic

Demetrius - yes, Baldwin much under-rated, ever since Churchill slagged him off so brutally: but the way SB handled the Strike, the press barons and the Abdication were, IMHO, masterly

Budgie said...

Gold standard? What about the conch shell standard instead?

Budgie said...

ND, don't tell me that the head of the International Energy Agency is one James Gordon Brown? Is this the brown bottom for oil, signaled by the sale of something we don't have enough of at a (relatively) low price?

Anonymous said...

Budgie, money has to be something that is rare , not breakable and not easily reproduced. etc etc.
Thats why the world settled on Gold for a long time. As you probably well know.
We have since switched to paper that the politicians abuse the value of as much as possible before it inevitably collapses.

Progress?


Nick, maybe you're right but the guy certainly isn't winning me over, his strategy appears to be to pretend there isn't a serious problem, and try to confuse the media over debt and deficit.

Nick Drew said...

budgie - yes, the Brown Bottom for oil will be along soon. BTW, in the oil patch the BB is rendered 'Browne', for it was John Browne (of BP) who called the bottom @ $10 / bbl (as recently as 1998, lest it be forgot) and bought Arco, Amoco and Burmah-Castrol at that time, thereby doubling BP's asset base - best piece of big-industry macro-speculation in recent years that I know of.

as to Balls, all I'm saying is that he's a true strategist - doesn't mean he's got it right this time around, or indeed in the past, or that a good strategist can't be let down by bad tactics / implementation

but he thinks in strategic ways and will prove a formidable opponent to anyone who doesn't: and although some credit Osborne with the same, he looks to me more like a devious tactician of the type that are two-a-penny in student unions up and down the land

Mark said...

'Cameron just stands blinking at the cameras, saying that the nice Mrs Merkel has promised him no-one will be asking us for any Greek bail-out money. (Does he have a piece of paper from her, I wonder ...) Pathetic.'

I've a nasty feeling these 'promises' Our Dave refers to have about as much chance of being acted upon as the 'promise' Blair received from the rest of the EU that,in return for compromising on the rebate, the CAP would be subject to serious revision.