Energy Prices (Strictly NO referrals!)

[b0rn2sk8]

No, I do not mean it the other way around. Electricity demand is driving the price increases in gas, since gas is used significantly within Europe to generate power.

In "normal" circumstances you are correct, but we are far from normal circumstances and what is fundamentally driving gas prices is the demand for it to generate power.

Heating oil has still increased over 200% in a couple of years, so I don't really think it's fair to claim it's price hasn't climbed "anything like gas" it's just been happening over a slower, longer period than the "spike" we're seeing in gas demand due to it's requirement for electricity generation as well as heating / cooking etc..

It’s only increased by 200% (aka its 3 times as expensive) if you pick the middle of covid where oil went negative on the whole sale market has your comparison point.

Aside from a brief spike early this year, in reality it’s ‘only’ just over twice the historical norm.

We are already way beyond that on gas at the current price cap.

I know it’s way more expensive than it should be but those relying on heating are not getting ripped off anything like gas users are at the moment and that’s pre the October hike.

 

[platinum87]

It depends what you mean and it what timeline

In the short term which most people are talking about the price cap will be deflationary on the CPI vs what we would have seen
Its highly likely to be inflationary in the long term, although it may not be significantly different to what we would have seen short term, just spread further out

the total inflation over the long term, will be higher. How much higher is the difference between the extra cost from subsidizing energy and the potential reduction of inflation from not subsidizing.

But while i am writing this i am wondering what exactly is the point of this entire thread tbh? Should i try to educate people about economics, should we share tips how to save money?

Usually though, 99% of the time, when i type this all out, i press the X on the top right. Wonder if i will post this one?

 

[Mercenary Keyboard Warrior]

the total inflation over the long term, will be higher. How much higher is the difference between the extra cost from subsidizing energy and the potential reduction of inflation from not subsidizing.

But while i am writing this i am wondering what exactly is the point of this entire thread tbh? Should i try to educate people about economics, should we share tips how to save money?

Usually though, 99% of the time, when i type this all out, i press the X on the top right. Wonder if i will post this one?

The reason I asked was your post was very unclear and it wasn't obvious if you even had it correct in the first place. Since you offered no timescale.
(when you consider most people think, now now now, it would potentially mislead most people)

Inflation will be lower immediately due to lower costs. It has to be higher later, to counteract the temporary lowering.
The actual difference should be somewhat minor long term, and we know most people only care most heavily about now.

It gets difficult to model in the potential deflationary effect from allowing the economy to crash soon after massive price hikes however if they were allowed to happen, the direct impact somewhat predictable, the indirect somewhat becomes a matter of opinion and hence as ever we get to the point that it would and will be politicised.

 

[n111ck]

But while i am writing this i am wondering what exactly is the point of this entire thread tbh?

It was seemingly for fantasising about 'the poor' burning down our cities and frozen corpses lining the streets as a means to usher in a new labour government lol

 

[Mercenary Keyboard Warrior]

To be honest this thread has been a rambling journey of whatever the main headline news is at any one time in regards energy pretty much.

I expect it will reach the great forum killing Brexit thread eventually in size as I certainly cannot see this ending to be a conversation point for the next 12-18 months.

(My view is maybe spring 24 it could be semi solved by then)

 

[b0rn2sk8]

By resolved, do you mean ‘got used to the new higher prices as normal’?

 

[Devilman]

It’s only increased by 200% (aka its 3 times as expensive) if you pick the middle of covid where oil went negative on the whole sale market has your comparison point.

Aside from a brief spike early this year, in reality it’s ‘only’ just over twice the historical norm.

We are already way beyond that on gas at the current price cap.

I know it’s way more expensive than it should be but those relying on heating are not getting ripped off anything like gas users are at the moment and that’s pre the October hike.

My Google-FU says 10.35kW/h per liter of heating oil and it's currently sitting around 90p/l, so roughly speaking it's 9p kW/h for kerosene heating oil.

The current price-cap for gas is 7p kW/h, increasing to 15p kW/h in October so yes, I agree that gas is *due* to suffer more but *currently* they are actually still better off than an kerosene heated home (and have been for many years previous to now). But that is far from the whole story.

For starters, those on domestic oil fired heating are *not* competing with the national energy generation and thus of course the prices would not spike as high as gas.
It also means that those on domestic oil fired heating are not actually *adding* to the burden on the gas supply, so again quite naturally they should not see the same kind of price rises.
Oil users do not get to "lock in" their prices for multiple years to secure cheap-rate electricity or gas. Oil users are always subject to the "winter price rise" that gas / electric users are not.

The argument that oil users are "not getting ripped off anything like gas users" is a bit of a flawed one, because the reality is that oil users get ripped off ALL THE TIME, while gas users are only now suffering any hardships due to the current energy crisis.

*edit* I am a heating oil user, even though I can stand on the roof of my bungalow and see the glow in the sky from the lights of (one of?) the UK's main on-shore gas terminal(s), we have no natural gas here at all. - Can you tell I'm bitter about it?

 

[HungryHippos]

The current price-cap for gas is 7p kW/h, increasing to 15p kW/h in October

This increase is no longer happening, at least to the same extent.

More like 10-11p/kwh if the rumours of price capping are true.

 

[Devilman]

It was seemingly for fantasising about 'the poor' burning down our cities and frozen corpses lining the streets as a means to usher in a new labour government lol

Well of course! After all the last 12 years have been such a screaming success!

 

[Devilman]

This increase is no longer happening, at least to the same extent.

More like 10-11p/kwh if the rumours of price capping are true.

Indeed very true. I was sticking to using the current "known" figures as everything still seems to be a bit "TBD" regarding exactly what level of "help" we're going to get, what price fix etc..

 

[b0rn2sk8]

I agree, tanked oil has always been more expensive, that the price you pay for living off grid, probably in a nice small village or the middle of nowhere. It’s never going to be cheaper because of all the overhead.

But I don’t think you can argue that oil users are being shafted any more than anyone else though because they just aren’t. The price hasn’t risen anything like the cost of gas.

I also can’t see how you can argue that oil users can’t lock in their prices for long periods. Of course they can, they can lock in for as much as they can store on site.

Many oil users get one delivery a year. It’s well within their gift to time it so they get deliveries in the summer when it’s cheaper, assuming they have the cash flow of course. I remember one of my neighbours had an ginormous tank, they could go years on a fill if they brimmed it.

 

[HungryHippos]

Indeed very true. I was sticking to using the current "known" figures as everything still seems to be a bit "TBD" regarding exactly what level of "help" we're going to get, what price fix etc..

It's more or less an open secret at this point I think, cap is going to be £2.5K average per year up from £2K now, so people can more or less work it out.

I think it's got a very high chance of being the case based on everything I've seen.

 

[Mercenary Keyboard Warrior]

It's more or less an open secret at this point I think, cap is going to be £2.5K average per year up from £2K now, so people can more or less work it out.

I think it's got a very high chance of being the case based on everything I've seen.

Yeah other than allowing for margin for error, its pretty predictable.
Eg assuming the cap is set at £2.5k for this mythical average home, are the elec and gas prices going to reflect the market movement as calculated by the proposed Oct price cap (and be compensated in relation to that), or something else
Will the SC be kept the same, or applied per Oct planned price cap, or something else.
So pretty predictable but there is a margin of error that could come from some tinkering, we simply cant say until its announced.

I wouldn't want to bet on it, but based on past announcements of stuff done in a rush I suspect tomorrow will still lead to some scratching of heads!

 

[Werewolf]

A cap isn't a great idea.
Direct credit for the poorest (not sure how you measure it though) would have been ideal.

Or a 1st 10KW per day is capped.

Something to help poor/typical use. But to not subsidise mansions, heated pools etc.

That would both be far too sensible to do, and far too easy.

It wouldn't require any major updates to most of the suppliers systems (or shouldn't), as it would just require the first 300/310 units per month be at one price and so could be applied even to people who don't have a smart meter*. It also has the benefit of it being something that used to be really common, as at one point most suppliers would offer a tariff that had a standing charge and then a singe price per unit, or a tariff that had no standing charge but the first X units were one price and then anything over that was slightly cheaper, from memory it was intended for people that were not at home for long periods so they didn't pay a standing charge. I think it got dumped because consumers complained it made it too hard to compare pricing across suppliers.


*If you've got a smart meter it could be done per day, but I suspect it would be simpler for the suppliers to just do it as X per month at price 1, anything over at price point 2.

 

[HungryHippos]

You'd need smart meters to enforce it though, or people will just lie about units.

Some houses can't get smart meters, I read some people in flats struggle to get them as not always allowed.

It's a good solution if it's properly scoped, and I'd support the idea of it, but in practice it has a lot of challenges.

 

[Devilman]

I agree, tanked oil has always been more expensive, that the price you pay for living off grid, probably in a nice small village or the middle of nowhere. It’s never going to be cheaper because of all the overhead.

But I don’t think you can argue that oil users are being shafted any more than anyone else though because they just aren’t. The price hasn’t risen anything like the cost of gas.

I also can’t see how you can argue that oil users can’t lock in their prices for long periods. Of course they can, they can lock in for as much as they can store on site.

Many oil users get one delivery a year. It’s well within their gift to time it so they get deliveries in the summer when it’s cheaper, assuming they have the cash flow of course. I remember one of my neighbours had an ginormous tank, they could go years on a fill if they brimmed it.

The claim of the price hasn't risen anything like the cost of gas is extremely short sighted and pinned very clearly in the "now". (not specifically a bad thing, it just paints a false picture wording it the way you did, as if gas was always rising at a higher rate than oil)
Looking at the history price of natural gas in the UK compared to oil, they have pretty much risen at the same rate over the last 30 years, except for the most recent spike due to the current energy crisis.
So while yes, it's true the price of oil hasn't risen anything like what was going to happen to gas with the new caps, we now know (but are still awaiting final details) that a package is coming to offset those rises.

I see no such package being offered towards those on domestic oil unless I missed it?
So with winter coming, we're expected to still have to "eat" a 200% rise, while gas users get help? Seems a little.... unfair no?
Especially when you consider that a lot of people who are typically living out in "some nice small village or the middle of nowhere" will often be older, retired individuals / couples who simply have no access to natural gas.

Also, the notion of "they can lock in for as much as they can store on site" is both laughable and ludicrous. Firstly there is the space required to store it - many people with oil-fired heating are not living in 5 acre mansions with enough room to store 50,000L of oil.
Then there is the costs associated with the tanks required to store that much fuel. Then there is the fire risk. Then there is the theft risk.
What if you had to tank and store all that gas you "lock in" at a cheap rate for 3 years onsite? Would you like to do that? That is what you're proposing here.

Most oil users get more than 1 delivery a year. The vast majority of oil installations are a 1000 or 1200L tank. Even with a super efficient boiler, you will still get through more than that in a year. Hell a lot of places will get through that in the 3-4 months of winter (depending on severity).

 

[b0rn2sk8]

You'd need smart meters to enforce it though, or people will just lie about units.

Some houses can't get smart meters, I read some people in flats struggle to get them as not always allowed.

It's a good solution if it's properly scoped, and I'd support the idea of it, but in practice it has a lot of challenges.

Why do you need smart meters?

You can do it straight off the meter reading. If the reading covers 45 days, you get the first 450 units at X and the rest at Y.

Keep it simple and don’t let the perfect be the enemy of the good enough. Pre payment meters is where it gets difficult.

 

[HungryHippos]

Why do you need smart meters?

You can do it straight off the meter reading. If the reading covers 45 days, you get the first 450 units at X and the rest at Y.

Keep it simple and don’t let the perfect be the enemy of the good enough. Pre payment meters is where it gets difficult.

OK but how do you verify the basic meter readings?

In reality people check them occasionally, but this could in theory have years between checks, as there are so many to do.

Smart meters would take out any shenanigans.

 

[Devilman]

Why do you need smart meters?

You can do it straight off the meter reading. If the reading covers 45 days, you get the first 450 units at X and the rest at Y.

Keep it simple and don’t let the perfect be the enemy of the good enough. Pre payment meters is where it gets difficult.

I think this part really is the key thing that a lot of people in this tread are overlooking.

There will always be outliers, edge cases and those who would stand not to benefit from proposals, But it is impossible to cover every case, keep every person happy, while delivering something in a timely manner that actually has a chance of helping a significant portion of those likely to be worst-affected by the potential price hikes.

 

[neocon]

Do the very poor vote?