Post by Pacifico on May 28, 2023 16:53:54 GMT
Good piece in todays Telegraph pointing out that the UK inflation woes are entirely self inflicted by the clowns in Westminster - they wont be happy until they have collapsed the economy and made us all destitute.. 
But I’d say the main reason UK inflation remains exceptionally high is our still elevated energy costs. Monthly gas prices fell 1.0pc between March and April, according to the Office for National Statistics, compared with a rise of 66.8pc during the same two months in 2022 – as energy markets reeled from the war in Ukraine. Electricity prices over the same period were 1.1pc lower, in contrast to a rise of 40.5pc between March and April 2022.
While these patterns help explain why CPI inflation just fell, energy in the UK remains comparably very expensive – keeping headline inflation high.
The US, for instance, is benefitting from a huge expansion in domestic energy production, exploiting shale reserves. That’s why wholesale US gas prices were almost 80pc below those in Europe during 2022 (
) and remain much lower now.
End-user electricity prices in the UK, though, at €46.65 per kilowatt hour, are still twice the European average – with prices at €27.18 and €21.01 respectively in France and Spain.
One explanation is the ongoing “green levies” on UK utility bills, used to subsidise the transition to renewable energy – charges which have been suspended during this tough period across other major European economies.
The UK also uses a marginal cost pricing model – which keeps energy bills high. While it’s true that solar and wind power generated around a third of electricity used in Britain during the first quarter of this year – marginally more than gas, in fact – supposedly “cheap” renewables, far from cutting energy costs, are pushing prices up.
That’s because renewables not only still depend heavily on subsidies, but also on having a large fleet of gas power stations on standby, which can be literally fired up on the large number of days when the wind isn’t blowing and the sun isn’t shining. Running this dual system is hugely expensive – and helps explain why the price of all UK electricity, however generated, is driven by the spot price of gas.
The reality is that renewable companies make money from the very intermittency problems they are supposed to be trying to solve – providing few incentives for them to come up with viable energy storage solutions.
And this, in turn, is a major reason why, despite last week’s reduction of Ofgem’s “energy price cap”, lower wholesale energy costs won’t be translating into much cheaper electricity for firms and households, and decisive falls in headline inflation, any time soon.
Oh - and before anyone decides to try and play party politics - all the clowns in Westminster are the same. Starmers latest scheme is to create 250,000 new jobs by shutting down the oil and gas industry..
But I’d say the main reason UK inflation remains exceptionally high is our still elevated energy costs. Monthly gas prices fell 1.0pc between March and April, according to the Office for National Statistics, compared with a rise of 66.8pc during the same two months in 2022 – as energy markets reeled from the war in Ukraine. Electricity prices over the same period were 1.1pc lower, in contrast to a rise of 40.5pc between March and April 2022.
While these patterns help explain why CPI inflation just fell, energy in the UK remains comparably very expensive – keeping headline inflation high.
The US, for instance, is benefitting from a huge expansion in domestic energy production, exploiting shale reserves. That’s why wholesale US gas prices were almost 80pc below those in Europe during 2022 (
) and remain much lower now.End-user electricity prices in the UK, though, at €46.65 per kilowatt hour, are still twice the European average – with prices at €27.18 and €21.01 respectively in France and Spain.
One explanation is the ongoing “green levies” on UK utility bills, used to subsidise the transition to renewable energy – charges which have been suspended during this tough period across other major European economies.
The UK also uses a marginal cost pricing model – which keeps energy bills high. While it’s true that solar and wind power generated around a third of electricity used in Britain during the first quarter of this year – marginally more than gas, in fact – supposedly “cheap” renewables, far from cutting energy costs, are pushing prices up.
That’s because renewables not only still depend heavily on subsidies, but also on having a large fleet of gas power stations on standby, which can be literally fired up on the large number of days when the wind isn’t blowing and the sun isn’t shining. Running this dual system is hugely expensive – and helps explain why the price of all UK electricity, however generated, is driven by the spot price of gas.
The reality is that renewable companies make money from the very intermittency problems they are supposed to be trying to solve – providing few incentives for them to come up with viable energy storage solutions.
And this, in turn, is a major reason why, despite last week’s reduction of Ofgem’s “energy price cap”, lower wholesale energy costs won’t be translating into much cheaper electricity for firms and households, and decisive falls in headline inflation, any time soon.
Oh - and before anyone decides to try and play party politics - all the clowns in Westminster are the same. Starmers latest scheme is to create 250,000 new jobs by shutting down the oil and gas industry..