Gas Price Hike - Another Brexit Bonus

In yet another exhibition of unintended consequences, the UK - but maybe not Northern Ireland - is facing hikes in the price of gas, with smaller energy suppliers either seeking bail-outs, or even going to the wall. And once more, the exposure of the UK to the full force of the free market shows every sign of being not unconnected to Brexit.

The promise ...

Not that the BBC is yet prepared to mention that particular B-Word, as it tells “The government is considering offering emergency state-backed loans to energy companies as firms battle to stay afloat amid surging gas prices. Business Secretary Kwasi Kwarteng will hold crisis talks with industry bosses including Centrica and E.On on Monday”.

There was more. “High demand for gas and reduced supply are behind a surge in wholesale prices”. There is, though, reassuring news: “Consumers are protected from sudden hikes through the government's energy price cap, a maximum price they can be charged on a default tariff”. After that, however, is a but. “But that also means energy firms are unable to pass on higher wholesale costs to their customers”.

... versus the reality

And so “Four small energy companies have ceased trading in recent weeks, including Edinburgh-based People's Energy, which supplied gas and electricity to about 350,000 homes and 1,000 businesses, and Dorset-based Utility Point which had 220,000 customers”. In addition, “The UK's sixth largest energy company, Bulb, is seeking a bailout, while four smaller firms are expected to go bust this week, as a result”.

So how big is that surge? “Industry group Oil & Gas UK said wholesale prices for gas had increased by 250% since January - with a 70% rise since August”. What might have been driving such an increase? This from the EU gives a hint: “On 1 January 2021, the UK left the EU's internal energy market. Energy trading through electricity interconnectors between the EU and Great Britain is no longer managed through existing single market tools, such as EU market coupling, as these are reserved for EU countries”.

In case anyone thinks the two are not connected, consider what energy prices look like for EU member states, and those countries that are part of the Energy Community (Norway has observer status). Ian Fraser has had a look: “Once again, Britain has the most energy in Europe, at €207.15 / MWhr (day ahead price). That’s more than twice what electricity costs in Norway (€95.8 / MWhr) #energycrisis Source: LCP Energy”.

Moreover, the day-ahead spread for EU member states has a maximum upper bound of €209.40 per MWh. That for the UK has an eye-watering upper bound of €1083.78, or more than five times as much. Contrast that with the Murdoch Sun telling readers before the 2016 referendum “Boris promises cheaper household gas bills if Brits back Brexit”.

Once again, alleged Prime Minister Alexander Boris de Pfeffel Johnson, who lies more or less as he draws breath, and his pals in our free and fearless press, can be seen to have lied to get the referendum result they wanted. None of them will be among those having to choose between more expensive food and far more expensive energy this winter.

The only unknown now is how long the electorate will tolerate the attempts to claim that the dastardly EU is behind all the misery before they realise they’ve been had. Brexit was a con job and is, as predicted, proving a disaster for the UK. No surprise there, then.

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