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This started last year with the post pandemic wage recovery but what’s driving it today is the increasing imported energy prices, driven by the price of gas and to some extent the cost of food. There are two reasons why gas prices are critical, the first is that we burn it to make electricity and secondly, we use it to heat and cook in some of our homes and workplaces.
The UK privatised its energy distribution services in the late eighties and in doing so the planners had to solve two problems. The new market had to be both profitable and competitive. They broke up the electricity generators and what today are called distributors but are in fact merely billing entities. They created a fake market and slapped a regulator, OFGEM, on top of it. The generator companies make electricity, from fossil fuels, nuclear, and renewables. OFGEM regulates the price onto and off the grid. Today it sets the price based on the highest cost source of supply i.e. Gas. The reason for this was to encourage investment in renewables, which are now capable of delivering to the grid at a considerably lower price.
The companies that are completely unaffected are the extraction companies, those who extract primary energy sources mainly fossil fuels from the ground. The UK quoted companies are BP & Shell, but several more of the UK’s primary energy suppliers are foreign owned. The…
