Blame our boom years for today's energy price news
Things get "tight and uncomfortable".
“Life could get very tight and uncomfortable around 2015 to 2018”, said Ofgem’s departing chief executive, Alistair Buchanan to the BBC’s Today Programme this morning.
The “tight and uncomfortable” refers to new energy price rises forecast amid power station closures. Coal is, in Buchanan’s words, “coming off the bars now” and nuclear and renewable sources are still in their infancy. So, in another breath of optimism, Buchanan explains: “We’re going to have to go shopping for gas in world markets... which briefly will be tight themselves, so we’ll have a double squeeze”. Again he emphasises, “Prices are going to get quite squeezy as supply and demand converge”.
Words like “uncomfortable” and “squeezy” from an influential figure like Buchanan are worrying. Although nobody yet knows quite how harsh these price rises will be, there is one certainty – this is unwelcome news.
For once, though, these unwelcome bills are not Coalition policy, they are the direct result of our boom years. International emissions agreements signed between 2004 and 2008, right before what Buchanan labels the “financial tsunami”, take most of the blame. While environmental policy, not the economy was headlining political rhetoric and green protests, not occupy movements were plaguing London’s streets, deals were made to cap emissions. These good intentions have now come back to haunt us as coal power stations are forced to close earlier than expected, and our reliance on gas doubles from 30 to 60 per cent.
Allocating blame to the past eases the pain. Decisions have been made and we must live by the consequences. But the effects are only short-term: once our wind turbines start spinning, wave hubs start floating and nuclear power plants start...humming, we will surely be back in the black.