Energy Hyperinflation Ship launching from UK in 3, 2, 1… prices so high there is talk of fracking?

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The UK “Price Cap” and forecast keep outdoing even the worse case scenarios, but finally the crisis is so calamitous that the UK Conservative Party are even talking of allowing fracking.

As the Wall Street Journal puts it: Household energy bills were expected to rise 40% this autumn, but on Friday the government regulator announced they’ll leap 80% in a single bound. (Who would have guessed that socialist price fixing would fail to cap the price?)

The current energy costs have just risen again, now “capped” at £3,549 per household, a horrible $4,200 USD or $6,000 Australian. But the future cap is headed for the mesosphere boundary layer at a shocking £7,000 by April. It’s so blisteringly bad that it’s being described as “worse than the GFC” in terms of its impact. It’s so bad, two out of every three Pubs say they are likely to close this winter, with the “monster hikes” to energy prices. That’s despite the Christmas season rush, and hopes that it will be finally free of Covid restrictions. The whole social care system is using the word “collapse” given that the price of a care bed will rise by seven fold thus wiping out their profit margins. It’s only a half a million bed industry…

At this rate there are estimates “half of British households could slip into energy poverty ” in less than six months. (Presumably someone will have to change the definition of “poverty” or it will be a real crisis.)

UPDATE: Things are finally so bad that the PM-in-waiting, Liz Truss, has said she will lift the Fracking Ban. Wow. It’s probably not a coincidence it happened on the same day the shocking new price rises were announced. One fracking company even say they could be pumping gas by January (if given a license immediately). But this move could signify hope that the NetZero serpent will lose some venom. If the UK starts fracking soon and discovers that houses don’t collapse in earthquakes and there are no rivers of fire, it will be impossible to put this genie back in the bottle.

h/t to NetZeroWatch

Look at those prices lift off

The Telegraph

Even middle income earners are going to need government help to pay their energy bills:

Daniel Martin, The Telegraph

“We are in a national economic emergency,” Mr Zahawi said. “This could go on for 18 months, two years, if Putin continues to use energy as a weapon.”

Dear Mr Zahawi, Putin has been using energy as a weapon for decades and you have only just noticed. Putin didn’t force Britain to stop fracking gas and build windmills, he just paid green groups to trick you into it...

The Quickening is here. Things are suddenly already at the point of second level consequences where the whole of the economy starts to unravel. There is now an expectation that small businesses will go bankrupt over winter so that means the energy companies are demanding small businesses pay steep deposits in advance for energy, which will break some of those businesses sooner.

Net-Zero Emissions Policy Bankrupts Britain

Wall Street Journal

And that’s merely what households will spend directly on energy. Britain is also in the grip of an energy-price crisis for businesses, whose rates aren’t subject to a cap. Some small businesses report they can’t get any utility to supply them without paying a steep deposit up front, because energy companies are concerned that high prices will push more small firms into insolvency.

To adapt Hemingway, net zero drives you bankrupt gradually, then suddenly.

Worse than the GFC:

UK Household Energy Bills Will Triple On New Price Cap

Irina Slav, OilPrice

“The impact to society will be higher than the 2008 crash in terms of the impact on households,” James Cooper, partner at consultancy Baringa, told Bloomberg a day before the Ofgem announcement. “We’re now moving into territory where a majority of households are placed into debt or a very fragile financial position.”

Earlier this week, French utility EDF warned that as many as half of British households could slip into energy poverty by the start of 2023.

All profit margins in the care sector are wiped out by energy price increase which makes the 450,000 bed industry “insolvent”. Presumably these sort of calculations apply to many industries and prices will rise accordingly. Energy inflation will become CPI inflation:

Social care faces collapse as soaring energy prices push up costs almost tenfold

The entire social care sector faces collapse in the wake of soaring energy bills with the cost of running care homes rising tenfold, experts warned.

The chief executive of Care England said providers faced a staggering 683 per cent increase in energy costs during the past 12 months, with bills expected to rise again early next year. For gas and electricity, the costs were £660 per bed, per year, this time last year; this week, care providers have to pay an astonishing £5,166.

With research from the Centre for Health and the Public Interest (CHPI) estimating the sector’s total pre-pandemic profits before tax, rent payments, directors’ remuneration and repayments on loans at £1.5bn per year, and the rise in energy prices will eradicate profit margins generated across the sector, driving many providers into insolvency and eliminating scope for investment.

Real change coming — Fracking ban to lift soon?

There is hope.

Liz Truss pledges to overturn ban on fracking in bid to end reliance on foreign energy imports

Tom Witherow, DailyMail

Liz Truss will end the ban on fracking as part of a plan to make the UK an ‘energy-secure dynamo’, she writes in the Daily Mail today. The Foreign Secretary said Britain cannot be ‘held hostage’ by authoritarian regimes and must end its reliance on foreign imports within a decade.

She pledged to win the support of local communities for fracking by ‘ensuring’ they see the benefits, and said new projects will only go ahead if there is a ‘clear public consensus’ in their favour.

It came as one fracking company in the North of England claimed, in a letter to the Treasury, that it would be likely to be able to inject shale gas into the energy market by January if it were granted a licence immediately.

Support for fracking has grown as soaring gas prices have hit household budgets, with Tory members voicing their support for new drillings in leadership hustings.

A mining engineer, speaking at the hustings in Manchester, said: ‘You cannot run, you cannot grow, you cannot progress a modern economy without a secure supply of cheap, abundant, readily available energy. ‘Right below our feet is the largest energy bonanza this country has ever discovered, bigger than coal and bigger than the North Sea.’

Most of the other solutions on offer by UK politicians involve printing more money, not finding more energy:

Mr Zahawi [UK Chancellor of the Exchequer] has drawn up a menu of options for the next Prime Minister amid calls from Ofgem for urgent help. Options under consideration include freezing the price cap as suggested by Labour, increasing benefits, handing extra support to small businesses and a loan scheme for suppliers that could shave £500 off bills.

As we discussed a few days ago, printing money from nothing is what got us into trouble in the first place, creating inflation, feeding sharks and corruption and punishing prudent savers.

The Government can “cap prices” but someone somewhere always has to pay the bill.

via JoNova

August 27, 2022