But High Energy Prices Are Good Because It Makes People Cut Back, right?
October 2nd, 2008
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In the UK, as in much of the world, the US included, high fuel prices are really starting to hit the lower classes hard. The price of fuel is becoming a major issue as winter approaches and with electricity and motor fuel costs rising an increasing number of working class people are feeling the pinch in a major way.
Now 5.5 MILLION households face choice between heating and eating as energy bills soar
Soaring household energy costs have left a million more people having to choose between heating and eating, according to official figures.
The statistics, released on Thursday, show that 3.5million households were in fuel poverty in 2006 – an increase of one million on 2005.
But charities claim the number spending more than 10 per cent of their income on power bills is now much higher. They say that since 2006 it has increased by another two million to around 5.5million.
Campaigners said that the rising numbers had left government pledges to cut fuel poverty ‘in meltdown’.….
The director general of Age Concern, Gordon Lishman, said: ‘Inflation-busting energy price hikes in recent months mean that around 5.5million households – including one in three pensioner households – are likely to be facing fuel poverty this winter.
‘It is hugely worrying that so many pensioners and low-income families are feeling forced to cut back on essential food and fuel because they’re so anxious about paying their bills.
‘Measures to improve energy efficiency alone are not going to solve the long-term problem of fuel poverty.’
Friends of the Earth director Andy Atkins said: ‘The Government’s fuel poverty strategy is in meltdown. The only long-term solution is a massive energy efficiency programme.’
Energy Minister Malcolm Wicks said: ‘It is the global demand for energy that is pushing up prices, but that is no comfort to the fuel poor who need support.
‘That is why the Prime Minister launched the substantial energy efficiency package last month; it is why we have required supply companies to improve social tariffs and it is why winter fuel payments for elderly people will increase substantially later this year.’
Honestly, why is it that every time there is an energy related issue coming up that some ass from FOE or Greenpee has to come out as the authority claiming that the entire problem is based on the government not spending enough money on “sustainable” energy, in this case “sustainable” meaning the kind does not work. Of course, energy effeciency programs alone are not going to improve this situation. Most of the people really being hit are already huddled in a corner under layers of blankets.
The last thing that is needed is “social tariffs” because if you start artificially trying to control the market place by subsidizing energy sales at lower than market prices and financing it by levying a tariff on everyone who can afford energy, then you will only make the situation worse, potentially creating shortages and driving the economy into meltdown by bringing industry to its knees and thus destroying the job base.
The answer is simple: More energy is needed. If you have plentiful energy then there’s plenty to go around. Companies can continue to employ people, people don’t go poor paying the heating bill and nobody freezes
So how about solar and efficiency and all? Well, the article also offers a case study for us to look at:
Rita Young faces a constant struggle to get by as the cost of heating and power surges.
The 72-year-old widow spends almost £1,000 a year on fuel bills – nearly double what she paid eight years ago.
‘The heating and electricity costs swallow up so much of my pension and make things very difficult,’ she said. ‘It’s getting harder all the time.
‘I’ve been told there is nothing else I can do to get the cost down. I’ve put every energy measure in place and I am still in fuel poverty.
I’ve got solar power, roof insulation, wall insulation, double glazing. I’ve even put silver paper behind the radiators to keep the heat in the room.
‘I don’t take baths and I wash my hair in the sink to save hot water. I only do clothes washing twice a week and that uses cold water. I have to think every time I put the heating on or use electricity.’
Mrs Young, from Peterborough, worked for most of her life as a personal assistant in an engineering company. Her husband Gordon, died in 2004 and she has a son and granddaughter who live in Australia.
She receives £7,844.60 a year in pension, pension credit and winter fuel allowance. This year her energy bills will be £948.
In 2000, she paid £480.
Geez. Solar power doesn’t cut it in the British winter? Who woulda think???
So much for the “effeciency and sustainability plan.” Thanks to this nonsense we have people’s grandmothers freezing.
Meanwhile, as fuel prices sore…
Rolls Royce, the company known for mega-luxury cars celebrated all time record sales last year and 2008 is shaping up to be another record breaker. Most of the cars sold by the company were in North America and Western Europe, but they’re also seeing huge growth in Asia and the Middle East.
The high sales are credited to the new line up of high end, high performance cars that Rolls Royce has been offering. The revamped lineup makes the new Phantom Coupe the flagship of the Rolls Royce line. The Phantom Coupe has turned out to be in such high demand that Rolls Royce is having difficulty filling all orders.
The 12-cylinder engine of the Phantom delivers more than 450 horsepower. Also, it’s one of the lowest ranking street cars in terms of fuel mileage, according to the EPA. City driving fuel effeciency is eleven miles per gallon. The fuel effeciency is so bad that the car can’t even be sold in mass in the United States, although it can still be driven on US streets with a per-owner exemption as an imported specialty vehicle.
This is not unique at all, however. In another similar example, although fuel prices have increased steadily since 2002, sales of Land Rover luxury SUV’s continue to be strong, increasing in 2003 2004 and 2005 to break new sales records each year. This should come as no surprise to anyone! The price of fuel is always a much lower proportion of expendatures for higher income brackets. Someone who drives thses kinds of cars does not really notice the difference between a $50 a week fuel bill and a $200 one. However, those who see their fuel bill go from $5 a week to $20 can be hurt by this increase, hurt bad.
Therefore, despite the fact that many “Green” groups will try to associate energy use and low prices with a shameful system and try to convince everyone that someone wind power and $10 a gallon gasoline is the way to achieve social justice and progressive ideals, nothing could be further from the truth. These groups paint themselves as being for the common person, grass-roots efforts to work for a better world for the lower classes and less oppression by the big bad corporations and government fatcats.
No matter how many times they continue this lie, it’s not true and it never will be.
High fuel prices never stop big, comfortable, powerful cars from guzzling gas. They just assure that they will only be the domain of the elite and the rest will have nothing at all.
Energy costs are always regressive. ALWAYS.
The sad thing is that groups like FOE and Greenpee will continue to put out this crap about how the problem is the fault of everyone else NOT taking enough of their advice. People will continue to eat this up and demand non-solutions like wind and solar power. The situation will continue to get worse and activists groups will continue to push this spiral downward. Maybe someday people will wake up. I hope so.
This entry was posted on Thursday, October 2nd, 2008 at 10:21 pm and is filed under Bad Science, Depleted Cranium, Enviornment, History, Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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October 2nd, 2008 at 11:13 pm
As a culture we suffer from some subconscious Calvinistic imperative that makes us believe that doing without is somehow more ethical than getting more, that sacrifice in and of itself is morally beneficial. Despite the fact that we acquire and consume at a rate unmatched in history, there is a small nagging guilt that somehow this is wrong. There is this small tender spot that the Greens love to poke whenever they can, because they have learned that this is the best way to keep donations flowing as people try to salve their imagined sins away by giving money to ‘the cause’; in effect the Greens are selling indulgences.
The real problem with all of this is an extension of the Paradox of thrift. This is the economic concept that if everyone tries to save an increasingly larger portion of his or her income, they would become poorer instead of richer. This is because the economy will slow down from reduction in demand and the very same people would lose their jobs. In more broader terms, our standard of living depends on our standard of living because that is what creates the demand that creates the jobs to satisfy it. This is the larger effect of creating what was referred to as “social tariffs” in the main post.
John Maynard Keynes was certainly correct when he pointed out that it is impossible to save your way out of shortages, but this in essence what these Green idiots are suggesting we should try.
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October 3rd, 2008 at 3:05 am
Heating oil is very similar to diesel; it’s an enormous waste turning such a good fuel to heat.
If the british electrical grid wasn’t such a shambles you could take some of the enormous tax on diesel products that is currently levied and subsidize heat pumps for these people.
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October 3rd, 2008 at 3:51 am
Another example of the West’s residual puritanism is the way in which hedonistic pursuits are often called “decadent” (that’s a word derived from “decay” by the way). For that reason I think that radical environmentalists should not be attacked as a threat to our standard of living. Instead, they should be attacked as Malthusians threatening human life itself.
Are you from the North-Eastern United States, Soylent? AFAIK the vast majority of British homes are heated by natural gas, and many of the remainder are heated by coke.
Does anyone else here question the wisdom of higher taxes on gas-guzzlers, on the grounds that gas-guzzling vehicles are Veblen goods? If the whole reason someone buys something is to say “Look at me! I’ve got loadsamoney!”, then taxing it would actually make it more attractive!
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October 3rd, 2008 at 5:21 am
George Carty said:
Sweden. Thanks for the correction.
When you say heated by coke, do you mean that it’s gasified at some central generating station and distributed(AKA “town-gas”)?
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October 3rd, 2008 at 7:26 am
Soylent said:
I hope he means that. The other way you could heat with coke is to use the kind of coke that you snort and that causes your metabolism to go crazy! It also has other effects.
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October 3rd, 2008 at 7:29 am
George Carty said:
Well, it would also price more people out of the market for them. Tax high end “gas-guzzlers” that might be affordable to the upper middle class would make them affordable exclusively to the wealthy. Thus you’re pricing more people out and that’s going to generally forward the the cause of increasing the class divide and decreasing upward mobility.
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October 3rd, 2008 at 7:45 am
I can confirm that the VAST majority of UK homes are heated by natural gas. Town gas was totally phased out in the 70’s with the discovery of the abundant North Sea reserves of natural gas. A smaller proportion use electric heating systems. Some of us, a very few, use solid fuel – coal or biomass. Rural areas (off of the gas main grid) may use heavy heating oil, but are more likely to use bottled gas.
My advocacy of energy efficiency is a matter of record on these pages, as is my Keynesianism (?). Yes, it is true that we cannot save our way out of shortages, but that assumes that the shortage is transient. The energy shortage, crunch, gap, call it what you will, may possibly be alleviated by more nuclear power, but I have great doubts that the market can provide the necessary boost in reactor manufacture. For instance (I’m sure you’ll correct me if I’m wrong) my understanding is that the only global supplier of the heavy forging capacity needed to manufacture reactor vessels, Japan Steel Works, has the capability of supplying 5 vessels per year. In order to maintain current nuclear power generation levels, 15 new reactors are required per year between now and 2050.
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October 3rd, 2008 at 8:10 am
Coke is the solid residue left after gas and tar have been extracted from coal. It replaced coal itself because it was less polluting.
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October 3rd, 2008 at 8:13 am
There’s no reason why other companies can’t go into the reactor vessel business. Japan Steel Works probably only got its monopoly because cheap natgas virtually destroyed the demand for new nuclear reactors.
Cheap natural gas, not TMI and Chernobyl, was the real reason why the ’80s was so bad for nuclear energy.
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October 3rd, 2008 at 8:43 am
McGlashan said:
No, that’s wrong.
OMZ (Uralmash-Izhora Group) will make all the russian reactor vessels. Doosan Heavy Industries, Larsen & Toubro and Mitsubishi Heavy Industries(In the process of doubling their capacity) can make some reactor vessels but I’m not sure if they’re capable of the largest ones. Harbin Boiler Works, Dongfang Boiler Group and Shanghai Electric Group are considering additions of very large forging capability for reactor vessels. is trying to get permission to export their forgings. Sheffield-based forgemasters are considering adding a press capable of handling 500 tonne ingots which would allow them to make pressure vessels up to and including the massive 1650MWe Areva EPR.
There’s nothing terribly difficult about large steel forgings that requires decades to scale back up. If Japan Steelworks gets this long backlog of potential customers it looks mighty tempting for other companies to add the capacity to make very large forgings and come in and take some of those customers off Japan Steelworks’ hands.
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October 3rd, 2008 at 8:45 am
Erratum: “…is trying to get permission to export their forgings.”
This sentence fragment refers to Larsen & Toubro.
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October 3rd, 2008 at 9:29 am
McGlashan said:
Keep in mind tat not all reactor designs need a large pressure vessel, the CANDU being the most obvious, but also the molten salt varieties operate at ambient pressure as well.
What I find difficult to fathom is how the woman in the lead post winds up paying so much AFTER taking steps to conserve power. I built the house we live in to Canadian R50 standards and heating is not a major blow to our budget because of this. While energy may be more expensive in the U.K, the winters are somewhat milder than mine are, so something isn’t adding up.
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October 3rd, 2008 at 9:52 am
DV82XL said:
The keyword here I think is our; she lives alone but still has to heat the house just as much and pay the same rent. If she is able to find one or two friends who can move in and share the rent and heating bill with her that ought to solve the problem. The caveat is of course that some people really value their loneliness and aren’t very personable.
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October 3rd, 2008 at 10:09 am
DV82XL said:
That’s the Daily Mail for you!
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October 3rd, 2008 at 10:43 am
DV82XL said:
Well, I can think of a few things. For one thing, it can be difficult to retrofit a house with the same level of insulation as a new home. If it is, for example, one of the older styles of stone houses it’s just very hard to insulate that kind of thing.
In England the winters are not as harsh, that’s true, but they get a damp cold that really chills you to the bone and can last for a long period of time of the autumn and spring.
The other thing, she might be a bit like some old women. I guess it’s a drop in metabolism or something, but my grandmother seems to need the temperature to be about 75 F. It’s very difficult because it’s completely incompatible with other members of the family. I go to her house and it’s so hot I can’t even spend the night there because I can’t sleep in that. She goes anywhere else and she’s in a sweater and shivering in normal temperatures. The woman wears a winter coat into restaurants.
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October 3rd, 2008 at 11:57 am
drbuzz0 said:
Ya I know what you are talking about, and that may have a great deal to do with her problem as fuel usage curves upward faster than the temperature as the thermostat is set higher.
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October 3rd, 2008 at 12:39 pm
I have a great aunt who insists on wearing a sweater in the summer. I swear she keeps her apartment at close to 90 degrees F, or at least over 80.
I could see how in England an old woman would run her heat most of the year.
Seems to me like the problem is likely more wide spread than just that though. Not all homes are easy to insulate and some people just don’t have the money of the capital cost of better heating and insulation, even with some government rebates. It would really cost a lot to pay for everyone to have modern insulation, windows, doors, roofing, sealing of all the cracks and everything.
If electricity were cheaper it would be a lot better. Electric heaters are inexpensive. Even if it were just to suppliment central heat, a space heater costs next to nothing and couple heaters would probably take care of most heating needs for a single person, especially when it’s not the dead of winter.
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October 3rd, 2008 at 9:47 pm
The Khazzoom-Brookes postulate, first put forward by the US economist Harry Saunders in 1992, warns that although it is possible to reduce energy consumption through improved energy efficiency it would be at the expense of loss of economic output. It thus argues that overzealous pursuit of energy efficiency per se would damage the economy through misallocation of resources. In other words reduced energy consumption is possible but at an economic cost.
It goes on to say that effect of higher energy prices, either through taxes or producer-induced shortages, initially reduces demand but in the longer term encourages greater energy efficiency. This efficiency response amounts to a partial accommodation of the price rise and thus the reduction in demand is blunted. The end result is a new balance between supply and demand at a higher level of supply and consumption than if there had been no efficiency response.. This is of course a refinement of Jevron’s Paradox which we have discussed before.
The work done by Khazzoom and Brookes began after the OPEC oil crises of 1973 and 1979, when demand for more fuel-efficient automobiles began to rise. Although greater fuel efficiency was achieved for each automobile on average, overall consumption has continued to increase. The OPEC oil shocks spawned huge improvements in energy efficiency, particularly insofar as oil was concerned. But three decades later, we find that the net effect of all of those efficiency initiatives has been to increase the world’s appetite for crude.
This clearly argues against the views of conservationists – those promoting energy efficiency as a means of reducing energy consumption- that one can identify every little benefit from each individual act of energy efficiency and then aggregate them all to produce a collective benefit and that the way to accomplish this is to force the price of energy higher.
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October 4th, 2008 at 1:15 am
Once again capitalism fails and shows that it does nothing but send everyone down the tubes for a few rich people to use them for their driving their luxury cars while everyone else starves and freezes. It’s over for America and just look at what is happening. Oil is over. The US is over. Every other country of the old capitalist gang is finally seeing it is over too: England, France, it’s over! People have wised up. You’ll keep holding on for a bit, maybe. Capitalism fails.
You are nothing but a greed nation and now the oil is runing out. Imperical ****tards. The capitalists have poisoned the world with chemicals and depleted uranium dust and now people realize you’re the ones who cause every problem. Sorry BushCheneyBlairMcCainPutin, it’s coming back to roost. You tear countries apart. You create disease. Your industrial farming rapes the earth. You poison the world with depleted uranium nuclear weapons and waste and radiation from your precious wifi and satellite television. Now it has come to haunt you.
Soon the old guard will fall complete with the Rolls Royce and the crazy American cowboy muscle cars. We will go organic, go natural, go communal, go health, go revolutionary! No need for oil or nuclear! Solar is the future. Wind is the future. Hope is the future. Nature is the future. Peace will be in the future, but the revolution may not be so peaceful in the time to come!
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October 4th, 2008 at 1:47 am
Okie, you’re an idiot. I’m not even American and I find your crazy crap to be offensive. It’s offensive how narrow minded and stupid it is. It makes me loose a little hope for the future of humanity every time I hear your crap.
A large portion of the problem is that the government dictates energy policy and groups who think consumption of energy is a shameful sin and who are religiously opposed to thins like nuclear energy and for nothing solutions like wind and solar have managed to get the governments of the world to side with them. This is the problem.
You’re delusional and worse ignorant. If you’re going to be an activist on an issue you owe it to yourself to at least take the time to learn about it before you go spouting off.
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October 4th, 2008 at 2:07 am
I have met chipmunks, squirrels and other small rodents who I am certain are more aware of the issues of the world than Okie.
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October 4th, 2008 at 3:22 am
Okie, this goes much further than just our economic/political system!
How do you expect to power the Haber Process (which produces the fertilizers which enable us to feed our present planetary population) using only unreliable solar and wind energy? Worse still, if we can’t have tractors and other farm vehicles, much of our food output will be eaten up (literally!) by horses!
Anti-Nuclear = Pro-Dieoff.
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October 4th, 2008 at 7:04 am
Soylent said:
Hi Soylent,
Thanks for the information, you paint the supply side to be a bit rosier than my sources did, and it would be quite comforting to think that heavy industry is mobilising on a grand scale to provide us with nuclear reactors to prevent the energy shortages which are all too easy to foresee.
However, a close examination of your post leaves my major point, that the market will not be able to provide; that state intervention will be required, intact. The majority of the enterprises you cite are the products of ‘State Capitalist’ systems, and as such are beneficiaries of patronage, nepotism, protection and subsidy. It’s been more than a decade since I was involved in the procurement of heavy forgings from Sheffield Forgemasters, they were still smarting from the Iraqi Supergun affair at the time – presumably they’ve cleaned up their act by now.
You allude to ‘considering’, ‘planning’ and ‘trying’ to add capacity that’s “not terribly difficult”.
http://www.youtube.com/watch?v=tNfGyIW7aHM
Perhaps, but it is capital intense and time consuming. As the global competition for capital intensifies in these deflationary times, we’ll see how many of these plans come to fruition without an increase in subsidies and state guarantees which the consumer and tax-payer will eventually be liable for. It is this concentration of state and monopoly power at the expense of the ordinary citizen which is my major objection to nuclear power.
On a side note, you probably noticed that the UK just sold its present and future nuclear generating capacity to French state enterprise EDF. Striking a chauvinistic note, the reactionary press in the UK cited this as a disgrace and an affront to national pride. Contrarily, I trumpet this move as freeing the British taxpayer from significant costs. We get the 6-8 new reactors which are planned, and the liabilities inherent in the existing fleet are transferred to EDF – all at the expense of the French taxpayer! Brilliant! Perfidious Albion at its most perfidious. It is interesting to note that our PM Gordon Brown’s brother Andrew, works for EDF. Fifth Columnist?
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October 4th, 2008 at 12:13 pm
McGlashan said:
To start off with the market has never been able to fully fund large electric generation projects, almost all of them have had some level of state participation, and the state has recovered these investments via taxes, direct and indirect, that flow from the sale of power. Second as a Keynesian you must no doubt be aware that these sorts of infrastructure type investments are exactly what is prescribed for periods of economic deflation. The American TVA being the most well known.
Furthermore, it’s unlikely that any serious amount of energy conserving retrofit at any level, be it homes or industry will go forward, especially in a tight money period, without some form of subsidy and it has been my personal experience that contractors and others involved in doing the retrofits are not paragons of honesty ether. And the idea of creating a public-transportation network without public funding is just a non-starter. So ultimately, whether it’s through direct spending, or crown corporations is going to be part of any energy solution.
Thus the argument in my mind boils down to asking what is the best way to spend public fund such that there will be a maximum return in available energy and this is where nuclear power wins. This would be particularly true if the licensing process were streamlined, and newer designs were built that do not require some of the more expensive and hard to get components that always cause delays on new builds. Also keep in mind that most of the liabilities claimed for nuclear power are artificial constructs of regulation driven by ignorance and paranoia; almost all of them can be proven to be unfounded, or at a minimum less of a concern than similar problems at coal-fired plants which have gotten a free pass for decades.
As for the British nuclear sector, I have this to say: you guys have consistently screwed over one of the most professional programs in the world. I have spoken to many who were driven out by shear frustration and came over here to work for AECL, and even taking into account the fact that most immigrants are malcontents in the first place, if AECL is a better place to work, things have got to be bad back home.
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October 5th, 2008 at 2:39 pm
Has anyone seen this video by the (anti-EU) UK Independence Party concerning the British energy crisis?
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October 5th, 2008 at 3:00 pm
George Carty said:
Just watched it. Just about the most damning treatment of the subject I have seen to date. While the U.K.’s membership in the E.U. is really none of by business, were it, this stupid policy would turn me against it on the spot.
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