Wednesday 19 October 2011

"Energy Summit": the Supertanker is Turning

In the lead-up to the Cameron-Huhne 'summit' this week on energy prices, politicians of all colours had been breathing fire on the subject of how badly the energy suppliers have behaved. Newspapers in apoplexy. The 'Big 6' were duly summoned to the headmaster's study for six of the best.

But what's this ? Instead of prosecutions under competition law, a friendly joint communique stating that lots of letters will be written to customers, everyone will shop around, and it's all jolly awkward what with world energy prices being so high.

This, ladies and gentlemen, is another early sign of the supertanker slowly being turned around. Someone (Osborne ? this blog ?) has got through to Cameron that, normal cock-ups and business considerations notwithstanding, the Big 6 are not such a venal bunch and energy prices are basically a function of (a) world prices; (b) taxes; and (c) various 'green' impositions made by, *ahem*, that would be you, minister.

Some more back-pedalling in the weeks and months to come, methinks. Say after me: GDP trumps GHG ...



Timbo614 said...

Energy is Cheap - too cheap! That's why we have a GHG problem. Try producing it yourself and you discover how cheap it is.

Referencing the recent holiday again, Take a 2 Ton Jaguar, Self, wife, Daughter, Grandson + All Luggage crammed in boot (and elsewhere). Move it all up one of Devon's 1 in whatever hills over a mile long...

How much would that cost you without Petrol - Say it cost a whole litre to get it up there hmmm... £1.35. Alternatively, Hire 6 horses, 3 men, provide vittals for same. Help Push :( and probably 3 hours instead of a minute or two...

From that perspective energy is cheap and we take it for granted and fritter it away!

Electro-Kevin said...

Timbo - What the fuck do you want to come to Devon for ? And in a Jag ???

ND - Tariffs are far too complex and esoteric.

However, I don't think a hundred quid or so is much profit to make out of someone over a year but it's the rate of increase that is surprising everyone.

No. The real scandal is the green tax and petrol tax.

Yes. It may still be cheap, Timbo; but on an international comparison it isn't and all these things are affecting our competitiveness.

Let's face it. Much of what we're paying for is not fuel at all but the socialist state and more red-tape artistes.

Nick Drew said...

Timbo - lovely example, your point is well taken

(but wouldn't the correct comparison be shifting the baggage and the people [not the 2 tons of Jag] ? In which case: 1 horse & cart for the baggage, and Shank's Pony for the people: 30 minutes ?)

Kev - actually I encountered just such a challenge, in Devon, in August - and very pleasant it was too. Dartmoor is great, & none of those scottish midges either

the one-mile hill was from the B&B to the nearest restaurant

and, come to think about it, I was quite glad of the car on the way back after supper ... forget that stuff I just said about walking

PS you are of course right abt the tariffs

Trigger said...

30 mins?

London to Portsmouth on the old roman road used to take 7 days.

Nick Drew said...

err - Timbo's challenge was a one-mile hill ...

I may be getting on but I can still take a 1-mile hill in 15 mins: the extra time was me being considerate for Mrs D

Timbo614 said...

@EK: We go to Devon at that time 'coz Mum & one sister live there, The timing is because of the 'birthdays' (Wife 28/9, Daughter 29/9 Mum 30/9). I take the Jag because - that sort of trip (with all people & luggage, etc) is what it's good at! (ignoring the fuel) But if we took the Twingo - we would need to take 2! Also the old jag has plenty of "single track scrapes" already so a few more is not a problem :)

Tax, Yeah, I have to agree - Whole trip 94 litres! Tax = £75.00 on Tax paid income!

@ND - No The point is that 1 litre of fuel is moving all that up the hill very quickly. That is it's "embodied energy" that's why it is so critical to our modern civilisation (but I'm sure you know that).

Anonymous said...

Being philosophical,

one could say that everything is made up of energy, matter, and intelligence - so everything can be denominated in terms of energy (up to a point of course)

So, it is not that energy is cheap, it is that other things (matter and intelligence) are becoming more expensive in comparison.

This sort of makes sense to me.

Mark Wadsworth said...

Ho hum, I've been waiting for you to post on this, I think that we are reaching a stage where we have to suspect the energy companies of exploiting their monopoly. But you say 'not yet'.

Clearly, the green taxes/subsidies are nonsense, but fuel duty is in itself a good tax because it prevents roads from being overcrowded.

Old BE said...

There probably are some competition concerns (barriers to entry being a good one), but you can't force consumers to be more proactive any more than you can force voters to take an interest in whether the rosette-wearer actually supports the same principles as you hope he/she does.

Far too many people (many in the media for some reason) assume that it is the state's responsibility to shield individuals from reality. We can't have a weak pound for exporters and a strong one for importers.

#EdM will look pretty silly if Mr Cameron or Mr Osborne point out that it was Mr Miliband who is responsible for such large increases in energy bills.

Budgie said...

Closing down our coal fired power stations, the dash for the cripplingly expensive "renewables", and "carbon" trading are of course largely imposed on us by the EU.

Mr Cameron dare not admit that, because it would reveal not only how little power the UK now has, but also that he has miserably failed to live up to his promises to curb the EU.

Budgie said...

MW said: "... fuel duty is in itself a good tax because it prevents roads from being overcrowded."

Not necessarily. It depends on how elastic the demand is over a given time frame. Short term (less than 10 years) I think it is largely inelastic, because we have built a society that is dependent on readily available local transport (cars/trucks). It will take 50 years to unwind.

James Higham said...

I somehow suspect Mark neglects LVT here.

Nick Drew said...

Anon - I like it. (also always find the dichotomy in physics between information and entropy really neat)(if I've understood it correctly)

MW - sorry to split hairs, but >6 companies do not a monopoly make

however, they are - entirely rationally - biding their time until the govt makes up its mind on a viable energy policy: & in so doing, the price goes up ... is this an oligopoly at work, or 6 companies independently acting rationally ?

BE - yes, barrier to entry is a real issue and at least the govt is trying to improve the situation there, one of very few things they are doing right

budgie - for the most part EC energy policy per se is quite good, pro competition etc, even finally beating up the French. But, overlaid with the CO2 agenda, it is getting increasingly distorted

James - baiting MW on that is a dangerous sport ...

Anonymous said...

oh, on the subject on energy can I ask you guys something?
Maybe a stupid question.

I look for a different investment as I already have some gold , silver.
So I was looking at energy companies, preferably not UK as I think we are in deepshit.
In the process of browsing different oil companies I notice the statistics are reported differently on different sites.
Yahoo, Google, from within my ISA, and then on the Toronto Exchange.

The same stock, from same exchange.
Take for example.
Canadian Oil Sands: P/E 9.58, Div 5.27%
google: P/E 9.17
yahoo: N/A N/A, guess they don't have the data.
tmx: P/E 9.60, div 5.27

I guess some of this is just down to timing/update issues.
But sometime results I have seen significantly different from each other.

I would assume lookin it up on the actual stock exchanges website would be the true figures?

rwendland said...

I wouldn't buy the Big 6 not being a venal bunch story, until they stop churning the best tariff offers over every 6 months or so, to prevent any non-hyperactive consumer being on a good tariff for long.

Glancing down a comparison website best offers I see tariffs called:

Online Energy Saver 16

SaveOnline 10

Sign On-Line 24

WebSaver 13

Go Fix 8

The speed of tariff churn has got well beyond the marketeers ability to think of new tariff names!! Huhne, stop this churn!!!

Anonymous said...

" but fuel duty is in itself a good tax because it prevents roads from being overcrowded. "

Then as a rationing mechanism, if you believe the hype it has failed.

As the least worst solution to paying for the roads then it is .... the least worst. Satellite tracking and GPS contending for the worst of all worlds slot.