Donald Trump has a lot to answer for. The attacks launched on Iran by American and Israeli forces on February 28 have supercharged our VUCA (volatile, uncertain, complex and ambiguous) world.
Soaring oil prices caused by the conflict have had a detrimental impact on global trade that has quickly been reflected in higher prices – and a further squeeze on businesses and households.
The Iran war has triggered an oil shock that is bigger than the Arab oil crisis of the 1970s, according to the International Energy Agency.
Disruptions to Middle East supplies because of attacks on the region’s oil infrastructure and the cessation of tanker traffic through the Strait of Hormuz sent Brent futures soaring, trading within a whisker of $120 a barrel.
Moreover, global supply of liquefied natural gas (LNG) from Qatar and the Emirates has also been reduced by around 20 per cent due to the situation.
Current projections show that by 2030 the UK will rely on LNG from places such as Qatar and the US for more than a quarter of its gas and for almost half by 2035 – up from around 14 per cent last year. LNG cargoes are traded globally and are four times more carbon intensive than home-grown gas. They can be diverted away from the UK during periods of high international demand, which simply increases the risk of price spikes and supply shortages.
If Trump has a lot to answer, then so too does Ed Miliband, Secretary of Energy Security and Net Zero, who has been the lead campaigner for the UK’s relentless drive to net zero.
The wholesale price surge on electricity will be directly passed to billpayers once Ofgem, the energy regulator, updates its quarterly price cap in July. The energy price cap is currently set at £1,758 per year for a typical household and is predicted to rise to £1,826 in July.
Households will face a ‘Trump tax’ on their energy bills as a result of this war
- Simon Francis
Simon Francis of the End Fuel Poverty Coalition said: “Households will face a ‘Trump tax’ on their energy bills as a result of this war and the case for government action to support households is becoming impossible to ignore.”
The short-term action demanded in the UK is likely to be dismissed by Sir Keir Starmer and Miliband.
While UK leaders from across industry, academia and civic society, including former prime minister Gordon Brown, are urging the Labour Government to strengthen national resilience by prioritising home-grown energy, there is a heightened debate that energy security is national security.
The Offshore Energies UK lobby is asking for reform of the Energy Profits Levy (EPL) or ‘windfall tax’, with early introduction of the government’s Oil and Gas Price Mechanism (OGPM) to stimulate investment in the UK’s domestic oil and gas production. This, says the lobby, would boost energy security, secure jobs and unlock up to £50bn of private investment and £15bn in tax receipts over the next decade.
As we report in the following pages, GB Energy is now up and running in Aberdeen. The organisation’s visibility in the North of Scotland is vital for the success of the energy transition, but it is also a state-owned organisation with a national UK remit which includes nuclear energy, something the Scottish National Party does not want.
Meanwhile Maggie McGinlay, the CEO of ETZ Ltd, is urging the Government to listen to the people of Aberdeenshire, Aberdeen City, Highland, Moray and Perth and Kinross.
A survey for ETZ by Diffley Partnership found that while the public is supportive of the transition, they are clear that local jobs and investment are a key requirement for the people in the north of Scotland. Transmission charges, which are calculated in relation to relative population size, is seen as unfair by 60 per cent of those asked.
But what is stronger is the continued support for the oil and gas sector in the north of Scotland, with 73 per cent positive about its economic importance.
