“The high price of energy is nothing more than an accounting fiddle.”
1: There is an abundance of energy out there.
2: The energy market is rigged.
.
Yesterday, the VGS posted this Guardian piece from Zoe Williams on its social media – where she writes that “this is an era of plentiful, cheap, renewable energy, but the fossil fuel dinosaurs can’t admit it.”
Two points arise from this.
1: There is an abundance of energy out there.
This is what Big Oil & Gas and its supporters have been saying for decades now; and, besides, ‘Peak Oil’ is never going to happen, so why worry? It seems, then, that there is indeed an abundance of energy – but in fact it won’t be hydrocarbons; and Big Oil & Gas is making a big fuss now about how we’re all going to suffer.
As Zoe Williams says, “the cynicism is jaw-dropping.”
Especially because…
2: The energy market is rigged.
Again, the apologists for Big Oil & Gas will insist that the markets are working well; however, it depends who the markets are working for. “A UCL report noted that fossil fuels set the electricity price most of the time, at levels that are now much higher than the green sources that constitute at least half of the load.”
Or, as VGS commentator Paul Foster says, “the high price of energy is nothing more than an accounting fiddle”.
He explains:
Nuclear and Renewables are first to be brought on line because they are cheapest and Gas being the most expensive is the last to be brought on line. BUT to determine energy costs, the price is set by the cost of the last production source to come on stream.
Costs aren’t calculated at (simplified, I know)
A units of Nuclear at X pence per unit + B units of Renewables at Y pence per unit + C units of Gas at Z pence per unit divided by the total units.
or [(A*X)+(B*Y)+(C*Z)] / (A+B+C)
That would be far too complex for the accounts people…
So instead they just work out (A+B+C) * Z
and charge all units at the gas price simple isn’t it?
It was all very good when the cost of gas was relatively low but the price of gas has upset the apple cart completely. However the energy industry and markets are sticking to their old methodology and it makes them a load of money and costs us a fortune!
Guess what? the politicians know this but they just don’t care.
Any of them…
I know because I have written to them all, and sod all happened!
But don’t take my word for it it’s all explained by Professor Michael Grubb (University College London Institute for Sustainable Resources) here:
“If we actually paid the average price of what our electricity now costs to produce, our bills would be substantially cheaper.” Electricity prices dictated by gas producers who provide less than half of UK electricity | UCL News – UCL – University College London