With the Russian Orthodox New Year rapidly approaching and with temperatures dropping; Vladimir Putin will no doubt pick his moment to revive the long standing feud with Ukraine over gas prices. This time last year the Russians decided to reduce gas exported into Ukraine, through which 80 per cent of Russian gas exports to the EU happen to flow, something which highlighted the real dangers of relying on imported energy.
So what you may say does this have to do with us? A lot is the answer, while Russia may have declining cash reserves over the long term and an economy that is heavily reliant on its trade in oil and gas – the risk of shortages as a consequence of the Kremlin and Mr Putin's geopolitical games is something we in the West can truly all do without. We are in the middle of a cold snap at the moment, and gas is the fuel that is used to heat about two thirds of Britain's homes.
On Monday (4th January 2009) the National Grid issued a warning (a Gas Balancing Alert) to energy providers that demand for gas is threatening to outstrip gas supply. This warning (the last one was sent out in March 2006) follows a 30 percent rise on normal seasonal demand as the cold snap continues. Natural Gas prices rose to their highest level in 10 months (reaching 45 p per therm) – this triggered the import of extra gas from Belgium and Norway via the natural gas (liquefied) importation terminal in Kent.
So what you may ask? Well - quite alot including the prospect of higher energy bills (because we the consumer pay for the shortsighted self interest of the energy companies), higher profits for the energy cartel (sorry companies) and more tax for Gordon Brown’s government. Now while other countries insured themselves against external shocks to their energy needs; successive UK Government’s left it to the market to sort out – so what did the energy companies do, they chased quick short term profits at our expense.
The UK’s market driven approach has been entirely inadequate. One year ago as of January 2009, France could store 122 days of gas and Germany 99 and the UK had storage capacity which would only 15 days. In the 1980’s and 1990’s developing a long term energy strategy or making sensible long term decisions in relation to energy supply was never an option for the Tories during their last tenure on government.
Likewise, the New Labour Government took the best part of a decade to recognise the need to increase storage capacity. The consequence is that UK has to sell gas during the summer because we cannot store it but UK energy suppliers often struggle to purchase gas again when it is needed during a particularly prolonged cold spell as we have at the moment.
The complicit insanity of the Conservative’s headlong shortsighted dash to gas in the 1980’s has been compounded by a real failure in basic strategic energy planning and made worse by the Government's perverse decision to half-heartily look at developing diverse reliable alternative energy sources. This New Labour Government has ignored repeated warnings that it was setting the UK on a path towards higher prices and blackouts.
As I have said before (and will say again) that as a matter of urgency the Westminster Government, the Scottish Parliament, the National Assembly and the Northern Ireland Assembly should work with the Irish Government to make these islands entirely self sufficient via renewable non market driven energy resources.
If we develop a flexible self-sufficient energy development strategy within these isles that encourages decentralised micro generation schemes and by actually implementing it this could create jobs, useful skills and help to bootstrap the economy out of the developing recession as well as helping consumers.
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