Whatever your views on Trump or the Islamic Republic of Iran it is clear that another fossil fuel crisis is upon us. Gas costs up 50% in 36 hours.
Congratulations to every one that has managed to limit or even stop their dependence on fossil fuels and to those of us still on the journey there is a new impetus to make progress.
I feel for those in fuel poverty and those about to have it thrust on them. When I met the now Mrs G she was in that category and I wouldn’t wish it on anybody.
Thanks for kicking off this crucial conversation and sharing that article. You’ve hit the nail on the head regarding how this exposes the fragility of our energy system. I’ve been thinking about this a lot over the past couple of weeks alongside some internal discussions we’ve been having at Carbon Co-op, and I wanted to share my perspective on where things stand.
First and foremost, my thoughts are with the people facing the devastating human cost of the conflict across Iran, Lebanon and the wider region. It is a tragedy on a massive scale. But in relation to our work in the community energy sector, I am deeply concerned about how this shock to fuel prices is going to hit people who are already struggling with fuel poverty right here in Greater Manchester.
I thought it might be worth summarising what I have been following from the situation, and what I have shared in conversations elsewhere:
While the media seems heavily focused on oil right now (and some initial measures from the government are protecting those relying on oil-heating - who are not sheilded by the price cap),
as you identify, gas prices are the real alarm bell for the UK.
The blockade in the Strait of Hormuz has essentially trapped Qatari gas exports, wiping out roughly 20% of global Liquefied Natural Gas (LNG) production. There is some movement now, but it is a fraction of what was going on prior to the war. Whilst Trump is trying to build a military alliance to defend trade routes - this seems like would be a major challenge that I can’t see going way anytime soon.
Because the UK is so exposed to the global LNG spot market, and European reserves are incredibly fragile, this missing supply triggers a vicious bidding war between Europe and Asia. This is why we’ve watched natural gas prices jump by over 50% so rapidly.
Prior to the war, it looked like we might see a continued downward trend with the price-cap, but it looks like this supply shock threatens to wipe that progress out completely. Currently, I would predict that we are going to see an extended period of uncertainty, and that oil, and gas prices will remain high for the foreseeable.
As grim as the market outlook is, your point about the new impetus to make progress really resonates with me.
If I can find a silver lining here, it’s that this crisis is completely destroying the argument for maintaining the status quo. With the government already having to step in with emergency support and talking about the need to “go green faster”, I feel we need to use this moment to relentlessly push for secure, local renewable energy and energy flexibility.
To me, this situation proves yet again that true energy security doesn’t come from relying on volatile global fossil fuel markets. It comes from retrofitting our homes, building community-owned renewables, and cutting our demand for gas entirely.
How we actually respond to this as Carbon Co-op is still unclear. Like everyone else, we are not really clear on how this is going to pan out in the mid-term, and whilst most people in a domestic context (excluding Northern Ireland, and commercial consumers) are protected by the price cap the direct impacts remain to be seen.
I am definitely interested to hear what you or other people think would be the best way for us to approach this from a co-operative community energy perspective. We have upcoming projects based around energy advice where I expect these questions will be front and centre.
@matt might also have some interesting thoughts to contribute on this, as he has been looking at the impact this will have on ‘intelligent’ electricity tariffs. Specifically highlighting how this current system excessively favours households with EV’s and to a lesser extent batteries.
The hardships here, as you point out, are nothing compared with what those in the firing line have to endure, but we have no meaningful influence on that until things settle down and aid can be provided. Meanwhile we have the home situation.
For the community retrofit/energy area, in my mind’s eye I see rows of terraced houses with new insulated and airtight roofs with solar panels rather than tiles or slates. Further retrofits can follow. Normally houses are done piecemeal, with excessive gaps between arrays. These are wasted potential.
Hi @Tim_Gilbert,
This clearest way out of this fossil fuel crisis (and the next) is the rapid electrication of demand and the rapid deployment of clean home grown energy.
Energy prices are not increasing, gas prices are increasing, which has a knock-on impact on electricity prices WHEN gas is the major contributor, in other periods electricity costs show minimal impact. We had negative energy prices on Friday and Sunday last week and this morning Octopus halved the standard off peak unit rate for some intelligent tariffs over the next period (April to June).
In my case this means 3.49p/kWh off-peak (down from 7p/kWh) - which will bring my overall average unit cost (including higher rate use) down from ~10p/kWh to ~6p/kWh and my total energy bill from £171.66 (last year), to a payment rather than a bill.
I expect energy prices to go up considerably in the next price cap period (from July 2026) for static import tariffs and that static export tariffs will reduce (again) however I also expect them to stay low for intelligent tariffs and to see an increase in dynamic export tariff rates (particularly over the evening peak).
At present this system excessively and unfairly favours households with EVs and to an (inexplicably) lesser extent battery. While these are heavily represented in the Carbon Co-op membership, they are far from mass market and remain inaccessible to fuel poor households.
The focus in the Warm Homes Plan of pairing electrification with generation and storage is crucial in addressing fuel poverty and protecting more people from gas shocks, especially where they can be paired with tariffs such as Tenant Power in social housing. Intelligent tariffs are a game changer in that they don’t require householders to understand the spot market or to amend their behaviour to benefit from reduced bills. They are also significantly better from a carbon point of view than static ToU tariffs, as they better match lower carbon intensity.
In is easy to feel powerless in the face of these horrific global events. Those of us who’ve been lucky enough to remove ourselves from the fossil fuel chain, can contribute to the anti-war effort by minimising our electricity import and maximising our export during high carbon periods (regardless of tariff rates) to reduce demand on gas reserves.
I agree that electrification of demand is the answer but for many it is impossible, given price differences at purchase. The country is beginning to be swamped with cheap(er) Chinese EVs, which will help with transport but home heating is still a major challenge.
There has been so much misinformation and dare I say disinformation accepted by the public that even a marked reduction in the cost of heat pumps and their installation will not encourage many to switch over.
I am fortunate to have electrified everything and the family/wallet are reaping the benefits. Some of those benefits will disappear when a higher proportion of the population do the same, so the hard core refuseniks will become progressively harder to get through to.
We shouldn’t cry over spilt milk but too many backward political steps have been taken over the years. Somehow we need to come through louder and clearer than the very well funded vested interests lobby.