The UK energy crisis
This graphic illustrates the extent of the UK’s dependency on fossil fuels for electricity: 3 the UK generated more electricity from gas in 2021 than any of the 39 other European countries sampled, except Italy. 85% of homes in the UK use gas as their heating source compared to less than 50% for France and Germany and 6% for Denmark. This is quite damning as gas prices in Europe are at an all-time high, as shown by the
diagram to the right. The UK also has some of the lowest gas storage capabilities in Europe; less than 1% of Europe’s gas is held by the UK. This makes it particularly vulnerable to a spike in gas prices, exactly what has happened these last few months. Should the UK continue in its addiction, it will forever be at the mercy of the volatile nature of fossil fuel prices which are determined by geopolitical factors out of the UK’s control, with consumers having to pick up the bill.
What are the short-term factors which are responsible for the shortages of energy that have triggered this crisis? 4 Firstly, the Ukraine-Russia conflict has had the most significant effect on gas prices, causing oil prices to be the highest since 2008. 5 Russia is the 2 nd biggest exporter of cru de oil and the world’s largest natural gas exporter (which, as previously discussed, the UK so heavily relies on). As a result of sanctions from Europe and the US and an alleged malfunction of the Nordstream 1 Pipeline, responsible for supplying Europe’s gas from Russia, causing it to shut down, the supply of oil and gas from Russia has dropped considerably, causing oil to reach its highest price since 2008. Now, the UK only gets 6% of its crude oil and 5% of its gas from Russia, but EU countries like Germany get nearly half of their gas from Russia and now, they must consider substitute sources. As a consequence, global supply has considerably decreased while global demand has stayed the same (and is projected to increase for the winter), causing global price to increase and in this case, skyrocket.
However, even before the Russia-Ukraine conflict, oil prices had been rising rapidly. This was due to a cold winter in Europe (2021), and with the increased demand for heating came increased demand for
3 See https://www.theguardian.com/money/2022/sep/01/energy-crisis-uk-households-worst-hit-in-western- europe-finds-imf. 4 See https://www.theguardian.com/business/2021/sep/21/what-caused-the-uks-energy-crisis. Date consulted: 3/9/22. 5 See https://www.bbc.co.uk/news/business-60509453.
250
Made with FlippingBook - Online catalogs