And now the forecasters are saying the price cap could hit £6000

Ultrasonic

tghe-retford said:

We're not talking about the idea of one less phone, one less car or one less takeaway here. We're talking of magnitudes of meals to stave off malnutrition, heating to prevent health issues which will place more pressure on the NHS, transportation to work which you need to pay the bills, the ability to donate to foodbanks which will provide food to those in need and the ability to live in your own home for independence and raise a family to name a few. Not things you can wave away or simply cut out.

Key to the discussion is that it's a mixed picture. For some it absolutely is what you're describing whilst for others it is things like not buying expensive phones, taking holidays, having expensive TV packages, eating out regularly, buying loads of expensive clothes etc. Or significantly reducing energy use. This is why I'd personally like to see more targeted support than ideas like using taxpayers money to freeze the current price cap.

To put this another way, if we don't see evidence of the sort of discretionary spending I just mentioned markedly falling then too much support is being given to people who don't need it.

tghe-retford

wittynamegoeshere said:

There are some pretty cold statements made on here, by presumably fairly wealthy people who appear to have zero empathy for those that simply can not afford the basic costs of living.

I get the impression that a significant number of vociferous posters on this forum could have a substantial financial or career interest within the industry and seem very keen to sometimes pretty insultingly put down those who question the status quo.  I don't know what the motive is, but the end result is often unpleasant to read.

The glaring elephant in the room is that SOME of our energy comes from imported energy sources so is subject to world events.  The issue is that we are selling our own home-grown energy to ourselves for pretty much the same price as it would cost to import, and this is often passed off as being due to the holy rules of market forces.  This means that the overall energy mix is costing the suppliers the same amount as entirely imported energy would cost, and those who happen to run the energy resources are making a massive windfall profit, at the expense of the entire population of the country.

I now await the usual insulting jokes about communism etc etc.

I share this sentiment and I will admit that a few comments on here had me walking away from the screen for a few minutes because of the tone of what was being said. I don't think people can comprehend what is coming down the line when reality hits home from their perspective.

My local council is already talking of implementing heat banks alongside the food banks that are already here. If the food banks can still run because when the bills come in alongside the rising food prices, people are not going to be able to afford to donate.

In the same way that interest rate rises and actual wage cuts will not do anything to curb inflation, cutting usage will not cut energy prices. This is a supply issue and it won't resolve until we have more supply on our end and on our terms. All cutting usage will do is raise wholesale prices to make firms more profit at the expense of those still paying. Companies know that if people use less, they can still make profit from the remaining user base by raising prices. They do not need to lower prices any more.

Phlik

wittynamegoeshere said:

There are some pretty cold statements made on here, by presumably fairly wealthy people who appear to have zero empathy for those that simply can not afford the basic costs of living.

I get the impression that a significant number of vociferous posters on this forum could have a substantial financial or career interest within the industry and seem very keen to sometimes pretty insultingly put down those who question the status quo.  I don't know what the motive is, but the end result is often unpleasant to read.

The glaring elephant in the room is that SOME of our energy comes from imported energy sources so is subject to world events.  The issue is that we are selling our own home-grown energy to ourselves for pretty much the same price as it would cost to import, and this is often passed off as being due to the holy rules of market forces.  This means that the overall energy mix is costing the suppliers the same amount as entirely imported energy would cost, and those who happen to run the energy resources are making a massive windfall profit, at the expense of the entire population of the country.

I now await the usual insulting jokes about communism etc etc.

The issue is we sold everything off decades ago and didn't build more. It's all now privately owned and they can sell it at whatever the going rate is. 

Ultrasonic

tghe-retford said:

 All cutting usage will do is raise wholesale prices to make firms more profit at the expense of those still paying.

Just on this point, this is the complete opposite of what basic economic theory would suggest would happen. Fundamentally prices are high because demand is exceeding supply. Reducing demand will act to help reverse this, not increase prices further.

tghe-retford

Ultrasonic said:

tghe-retford said:

 All cutting usage will do is raise wholesale prices to make firms more profit at the expense of those still paying.

Just on this point, this is the complete opposite of what basic economic theory would suggest would happen. Fundamentally prices are high because demand is exceeding supply. Reducing demand will act to help reverse this, not increase prices further.

Problem is, that is exactly what happened with the mobile phone network market in the early to mid 2010s. They priced out people and increased prices for people who could still afford their product. It worked and many networks followed that practice. Now the energy generation companies and the wholesale price will follow. And they have an green strategy which requires reductions in energy usage to lower CO2 to consider now too.

The days of reduced demand will lead to reduced prices have come to an end. It no longer applies. And even if there was an excess of supply somehow, they can just do an OPEC on energy to keep prices high.

michaels

wittynamegoeshere said:

There are some pretty cold statements made on here, by presumably fairly wealthy people who appear to have zero empathy for those that simply can not afford the basic costs of living.

I get the impression that a significant number of vociferous posters on this forum could have a substantial financial or career interest within the industry and seem very keen to sometimes pretty insultingly put down those who question the status quo.  I don't know what the motive is, but the end result is often unpleasant to read.

The glaring elephant in the room is that SOME of our energy comes from imported energy sources so is subject to world events.  The issue is that we are selling our own home-grown energy to ourselves for pretty much the same price as it would cost to import, and this is often passed off as being due to the holy rules of market forces.  This means that the overall energy mix is costing the suppliers the same amount as entirely imported energy would cost, and those who happen to run the energy resources are making a massive windfall profit, at the expense of the entire population of the country.

I now await the usual insulting jokes about communism etc etc.

A big part of the reason that home grown supply is less than demand is that every time domestic suppliers make a return on their investment the govt slaps on a 'windfall tax' - a pretty strong disincentive to invest in UK production if you have a limited investment budget.  Suppose every time you did some overtime the govt took 90% of the money you made - pretty good incentive not to do overtime.

Perhaps it would work better if the govt owned the energy industry.
1) Each time you wanted to change something it would take weeks or months as it does for HMRC, DVLA and the passport office as there is no customer service ethic
2) And how about investment - imagine you are the chancellor and have £1bn to invest - do you invest in energy generation (probably unpopular to at least one group of nimbys and of no interest to everyone else) or build a new hospital?

michaels

sienew said:

michaels said:

sienew said:

MattMattMattUK said:

The thing with the levels that are predicted for October onwards as they are not going to be costs which most people will just blindly keep running up, they will cause behavioural and lifestyle changes, the average bill will not be even close to £6,000 because most people will cut back dramatically. There are predictions of dramatic drops in consumption due to cost increases, people will adjust their usage downward.

I'm not convinced that most people are willing to accept a fall in living standards that reduction in usage would require.

So will they invade Russia, invade Norway or suck up to Putin over Ukraine.  Otherwise it is just a spoilt child insisting on being given something by a parent who can only get it by stealing.

No. They will probably demand govt action/intervention, protest, not pay, possibly even much worse civil disobedience.

(I'm not saying this is right thing for people to do... just that it seems quite probable)

So the govt can transfer wealth between different groups (subject  to the limits of acceptable taxation, we already see doctors etc working shorter hours/retiring early as he trade off between working and time is not one they find favourable) but we also need to pay to keep importing gas.  Minting new £1 coins (borrowing) will not really impress foreigners who can see their holding being devalued going forward (currency falls) so we will need to sell more stuff - just when other countries are tightening their belts to pay for their expensive gas needs.  Perhaps we can reduce our imports of Audis and iPhones and instead buy gas?

Otherwise we are back to either stealing it (ie invading Norway) or negotiating a cheaper deal (abandoning Ukraine)

xzibit

I seriously worry for families that don’t fully grasp the whole seriousness of the crises and don’t connect their direct debit cost with unit costs and therefore how their usage will directly impact their costs. So many people honestly believe that they pay ‘x’ a month and that covers their energy use. I really wish the media would do more to try and get this across as it’s so important. 

When a family starts paying there £300 a month and is cutting back on food, and then in 3,6,12 months get told by their energy supplier they are hundreds of pounds in debit, what are they going to do? 

We have cut back on many things and will only be cooking at weekends to help save electricity but this is because we understand the less units you use the less you pay. 

QrizB

tghe-retford said:

Problem is, that is exactly what happened with the mobile phone network market in the early to mid 2010s. They priced out people and increased prices for people who could still afford their product.

I don't recall a government-mandated cap on mobile phone prices, though.

There isn't much scope (if any) for energy generators to increase the wholesale price of energy unilaterally, and energy retailers have a cap that's tied to the wholesale price.

jimpwarsop

xzibit said:

I seriously worry for families that don’t fully grasp the whole seriousness of the crises and don’t connect their direct debit cost with unit costs and therefore how their usage will directly impact their costs. So many people honestly believe that they pay ‘x’ a month and that covers their energy use. I really wish the media would do more to try and get this across as it’s so important. 

When a family starts paying there £300 a month and is cutting back on food, and then in 3,6,12 months get told by their energy supplier they are hundreds of pounds in debit, what are they going to do? 

We have cut back on many things and will only be cooking at weekends to help save electricity but this is because we understand the less units you use the less you pay. 

Depends, some will just cancel their direct debit and see what happens.  If they are renters and have no assets, the answer is probably not very much.