The energy crisis; how did it start? How is it affecting everyday people and businesses? And where is it all heading? These questions I have posed to industry experts and members of the public to try and understand what’s behind the headlines.

 

When the crisis originated is “very subjective” says Wayne Brown of Inspired Energy. “Some observers would say that the UK has experienced an energy crisis for many years” he reports, “The UK has its own indigenous gas reserves (UKCS) in the North Sea. However, production has been in steady decline since the early 2000s”.

 

Discussing the factors that caused the crisis, Brown says “You could cite the government’s lack of investment in renewables, particularly nuclear, and a reduction in medium and long range storage”. He also writes that the COVID-19 pandemic caused a maelstrom within the market, as the UK came out of the last lockdown, and this, working in tandem with other factors across Europe (low storage levels, colder temperatures, lack of renewables), resulted in a “huge spike” in energy prices. And now, Russia’s illegal invasion of Ukraine has led to “reduced oil and gas flow across Europe.”

 

We then moved on to the impact that this crisis has had on businesses. Brown states that “Businesses have seen their energy costs increase by over 300%. Some have had to make staff redundant, others have scaled back operations”. Larger consumers and companies had been procuring energy directly from the wholesale market via flexible contracts, which means that they can benefit from falls in wholesale energy costs, and these contracts are now open for smaller companies to access as well.

 

Moving on to the topic of government schemes, Brown says that they “are only a sticking plaster” in his view. He believes that they will certainly help homes and businesses during the expensive and daunting winter months, but “we need to invest in more infrastructure”. However, the government has already committed to this and has awarded “>100 new licences for exploration in the North Sea”. Other measures are being looked into, but these have not yet had an immediate effect on prices.

 

When prices will drop “depends on how the war in Ukraine plans out”. Any escalation in events would anticipate a further impact on prices. According to Brown, “It also depends on how quickly the UK can become more self-sufficient”. It is expected that other European countries, that are reliant on Russian imported gas, will focus on their own energy policies too.

 

Now focusing on the general public, in a local survey, most people’s energy bills have gone up an average of over 200%. People are now taking matters into their own hands to reduce their energy prices, for example; reducing the temperature on their thermostats, fitting LED lights and making sure that lights and appliances are turned off when not in use, and putting on extra items of clothing to keep warm without heating.

 

Some say that as a country we should stop relying on resources from other places and should start being independent in energy production. Participants also said that it’s a difficult position for the government, but they should cap profits on energy companies and one response says that the government should tax fossil fuel companies and use the money to fund renewable energy sources.

 

Energy is a complex and intricate commodity which is affected by so many factors. It is difficult to predict what the future may hold for energy consumers but hopefully we are now at the peak of the crisis and 2023 will see a reduction in prices.