Are governments powerless ?

ChrisWood

The huge increases in energy costs seem to be riding on the supply/demand. Countries which have the natural resources of oil and gas can sell them at ever increasing amounts because the demand for them is guaranteed as the world is hooked on oil and gas. We are now seeing these countries squeeze everyone by seemingly putting the prices up to the max and beyond what they can afford. Consumption will drop to some degree as people will switch their heating or airconditioning off because they cannot afford the fuel it consumes, but that will only cause a small decrease in overall consumption. Why is it that governments are not stepping in now as it seems a free for all ? People are going to die because of this greed.

pochase

What are you suggesting? Starting a war?

Astria

And what is the government supposed to do exactly? Visit those countries and say you are not allowed to charge that for your oil? IO think they'll be told if you don't want it at the price we say don't buy it.

They could remove the fuel duty from petrol/diesel, but that's only likely to cause a 50 billion hole in tax income, so other taxes will need to raise as a result.

Ultrasonic

ChrisWood said:

Why is it that governments are not stepping in now as it seems a free for all ?

In what way?

Ectophile

ChrisWood said:

The huge increases in energy costs seem to be riding on the supply/demand. Countries which have the natural resources of oil and gas can sell them at ever increasing amounts because the demand for them is guaranteed as the world is hooked on oil and gas. We are now seeing these countries squeeze everyone by seemingly putting the prices up to the max and beyond what they can afford. Consumption will drop to some degree as people will switch their heating or airconditioning off because they cannot afford the fuel it consumes, but that will only cause a small decrease in overall consumption. Why is it that governments are not stepping in now as it seems a free for all ? People are going to die because of this greed.

What do you expect us to do?  Invade a country that has lots of oil and gas, and force them to sell it to us at very low prices?

tghe-retford

We've burned our feet by implementing a windfall tax and adopting a green strategy which means companies are now pulling investments out of the UK and fracking will not be an option. Any little thing we do with fossil fuels or renewables won't touch the sides. Every other thing is outside of our control and any intervention would only make things worse. We can't control fuel and energy from overseas, we can't reverse the money we printed and we can't reverse the consequences of lockdown and we can't ask Putin nicely to stop his invasion. Tax cuts are not an option, they've been ruled out.

The only tools Government have now is to reduce demand. Interest rates are rising, modest pay rises and pay freezes are being implemented and yet are not having an impact. Government today has said they want to curb inflation fast using a collective discipline and sacrifice with tough, difficult and potentially unpopular decisions to come soon. The only way to do that is to get people to cut their pay, do fewer hours at work and stop spending on everything bar essentials - and even then, cut essentials. For people to re-evaluate and reset their expectations for a standard of living and for businesses to evolve and adapt to a future where people will have less to spend and items will cost more. It is what happened in the 1970s and I fear it is coming soon.

Sorry if that is not the answer you want to hear. It is however, what I suspect will be reality in the near future.

markin

They could buy shares in Shell, BP, ect  Any company that's drilling in the north sea, and then use the profits to sub uk users, Norways residents are now 100 billion richer.

Emmia

markin said:

They could buy shares in Shell, BP, ect  Any company that's drilling in the north sea, and then use the profits to sub uk users, Norways residents are now 100 billion richer.

Norway's strategy to oil revenue is, and has been for a long time different from the UK (we didn't invest it in a sovereign wealth fund, they did) - and they have a much higher tax level overall.

spot1034

markin said:

They could buy shares in Shell, BP, ect  Any company that's drilling in the north sea, and then use the profits to sub uk users, Norways residents are now 100 billion richer.

BP and Shell haven't delivered much of a profit for their shareholders over recent years with the exception of the very short term, where - yes, if you'd imvested over one year or two years you'd have done OK. Look at the longer term and the story is very different. These are cyclical businesses, and neither company has been a particularly exciting investment over the past five or ten years - Shell broadly flat and BP showing a loss over both those periods. 

MattMattMattUK

ChrisWood said:

The huge increases in energy costs seem to be riding on the supply/demand. Countries which have the natural resources of oil and gas can sell them at ever increasing amounts because the demand for them is guaranteed as the world is hooked on oil and gas. 

There are plenty of ways out, but there seems to be little public appetite for them either in terms of cost and the taxation required to fund them, electing governments who would build them, or wanting "free money" handouts rather than investment. If the UK wanted it could be almost energy independent within a decade, it would require a large scale nuclear power building program as well as large investments in wind and investment in solar, as well as some domestic fossil fuel energy extraction to tie us over before we can drop them completely. However we have a significant minority of the public who are irrationally against nuclear, a large minority who insist they need to drive oversize, overconsuming fossil fuel vehicles, a bunch against more wind farms and soar investments and 85% of people who refuse to pay any more tax to fund the needed investment. We are our own worst enemy.

ChrisWood said:

Consumption will drop to some degree as people will switch their heating or airconditioning off because they cannot afford the fuel it consumes, but that will only cause a small decrease in overall consumption.

Residential consumption will likely be down around 20% this winter. Vehicle fuel consumption is hard to gauge because of the impact of far more people working from home, but total vehicle fuel usage seems to still be down 18-25% against 2019 figures.

ChrisWood said:

Why is it that governments are not stepping in now as it seems a free for all ?

What do you expect them to do, the public as a whole opposes any reasonable solution, unreasonable solutions (invading fossil fuel producers) will not solve the problem either and we need to phase out fossil fuels anyway. 

ChrisWood said:

People are going to die because of this greed.

Hyperbole.

MattMattMattUK

markin said:

They could buy shares in Shell, BP, ect  Any company that's drilling in the north sea, and then use the profits to sub uk users

Buying those shares would not be a sensible use of government funds. The yield would likely be wiped out by the interest the government would have to pay on the borrowing it needed to do it, yields are inconsistent and in a best case scenario the it would take 50 years to reach beak even but likely between 75 and 125 years. 

markin said:

Norways residents are now 100 billion richer.

Norway too a very different model from the start and has a much smaller population in relation to it's natural resources. They also pay much higher taxes and elect sensible governments. In the UK, North Sea oil was used to keep taxes on the electorate lower for 40-50 years, the money was wasted. In Norway the money was invested in a return yielding sovereign wealth fund. Norway took a sensible path, the UK squandered it's natural resources, that choice was made decades ago and we have to live with the consequences. Norway Sovereign wealth fund is valued at around $1.4 trillion.