Causes and consequences of the 2022 UK energy crisis
Darius Patilea
Risking to plunge the UK into recession and drive inequality and poverty up across the whole of the UK, the ongoing energy crisis is a very relevant topic to UK economic climate. My essay will examine its causes and likely consequences. The underpinnings of this crisis are more immediate short-term factors straining a system already strained by deeper and more basic deficiencies in the function of the UK’s energy sector.
This graphic, based on a sample of over 80,000 European homes, reveals an alarming statistic: 1 UK homes have the poorest insulation compared to all the other countries in western Europe, with there being some significant discrepancies in between countries (e.g. Germany, Austria, Denmark losing 3x less heat than UK homes over the same time period). There are significant repercussions on both a micro (the consumer’s expenditure on heating the house) and macro (the demand for energy in that nation) level for the UK having the worst insulation in western Europe. The effect on the consumer is clear: it is more expensive to heat a UK household than one elsewhere on the map, given identical energy prices. This inefficiency translates up to
the national level, ceteris paribus , the increased demand for energy per home leads to an increased demand for energy nationwide, which when global prices are hiked up due to extraneous factors, the countries with the highest demand for, in this case fossil fuels, suffer the most. The rise in global fossil fuel prices causes an even sharper rise domestically due to the UK’ s heavy reliance on fossil fuels for energy, which is then passed down to the consumer, their thermally inefficient home contributing directly to their own energy bill (‘ two-thirds of UK homes that are energy inefficient, rated D or worse, will pay at least £1,000 more this winter ’). 2 This leads me to the second deep- rooted factor behind the energy crisis: the UK’s heavy addiction to fossil fuels. This makes the energy crisis really a fossil fuel crisis, where, due to the spike in the price of fossil fuels in recent times, UK suppliers have had no choice but to keep buying fossil fuels to meet the UK’s energy demand but are forced to raise prices which are then passed down to the consumer.
1 See https://twitter.com/Ed_Matthew1/status/1563052351782780928/photo/1. 2 Horton, H. ‘ Poorly insulated homes will spend almost £1,000 more on gas ’ at https://www.theg uardian.com/money/2022/aug/10/poorly-insulated-homes-will-spend-almost-1000-more-on-gas-study-says. Date consulted: 3/9/22.
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