World Bank warns oil prices could soar to record $150 a barrel
Oil prices could soar to a record high of more than $150 a barrel if the war between Israel and Hamas leads to a repeat of the full-scale conflict in the Middle East witnessed 50 years ago, the World Bank has warned.
In the first major assessment of the economic risks of an escalation of the war beyond Gaza’s borders, the World Bank said there was a risk of the cost of crude entering “uncharted waters”.
A “large disruption” scenario comparable with the Arab oil boycott of the west in 1973 would create supply shortages that would lead to the price of a barrel of oil increasing from about $90 to between $140 and 157. The previous record – unadjusted for inflation – was $147 a barrel in 2008.
“The latest conflict in the Middle East comes on the heels of the biggest shock to commodity markets since the 1970s – Russia’s war with Ukraine,” said Indermit Gill, the World Bank’s chief economist. “That had disruptive effects on the global economy that persist to this day.
Oil and gas licences may not cut energy bills, says Energy Secretary
The Energy Secretary, Claire Coutinho, has acknowledged that the government’s proposed mandate for oil and gas licensing in the North Sea may not necessarily lead to a reduction in household energy bills.
This statement has raised eyebrows, with the Labour party calling it a “stunning admission.”
The upcoming legislative plan, set to be unveiled in the King’s Speech, will require the North Sea Transition Authority (NSTA) to annually solicit applications for new production licences.
Government ministers argue that this move is essential to protect the country’s prosperity.
They claim it will provide job security for approximately 200,000 workers.
However, the Opposition has criticised the plan, arguing that it will effectively channel billions of taxpayer subsidies to oil and gas giants.
In an interview with the BBC, Ms Coutinho clarified the government’s position, stating, “It wouldn’t necessarily bring energy bills down, that’s not what we’re saying.
“But it would, as I say, raise a significant amount of money that would help us, for example, fund public services, also fund the transition into different forms of energy, such as offshore wind and solar energy. This broader transition could indirectly contribute to reducing energy bills.”
Billpayers could foot the bill for energy supplier failures, warn MPs
The Public Accounts Committee (PAC) has raised concerns about the accessibility of energy bill support for those in need and the potential burden on taxpayers following the collapse of energy supplier Bulb.
While commending the government and regulator Ofgem for their swift actions to protect customers, the PAC revealed that not all eligible households have claimed the support offered.
The PAC’s report also criticised Ofgem’s “low bar” approach to licensing energy suppliers, which led to numerous suppliers failing and incurring costs to the public.
The committee recommended that Ofgem and the government ensure that only financially resilient suppliers receive licences while maintaining healthy competition in the energy market.
The PAC has highlighted that while the government anticipates recovering a significant portion of the investment aimed at safeguarding 1.5 million customers affected by Bulb Energy’s failure, there is a risk that consumers may ultimately be burdened with the costs if the full funding recovery is not achieved.
According to the PAC, it is estimated that around £2.96 billion of taxpayer funds could potentially be recuperated from Octopus Energy Group, which acquired Bulb.
However, MPs claim that this still leaves an approximate shortfall of £246 million that could potentially be shouldered by energy billpayers.
Dame Meg Hillier, Chair of the Committee, said: “Our report is a sobering reminder that we are still living with the fallout of the failure of so many energy suppliers in 2021-22.
Energy suppliers hold £8.1bn of customers’ money
Energy firms held £8.1 billion of customers’ overpaid bills at the beginning of 2023, according to Ofgem’s findings.
At the beginning of 2023, energy companies held an estimated £8.1 billion in overpayments from customers’ bills.
That’s according to new figures released by Ofgem.
A considerable number of households make regular monthly payments, building up a surplus during the summer months to help cover the increased expenses of winter.
MP Angus MacNeil has accused companies of accumulating “excessive reserves” and “profiting from this financial advantage.”
Energy UK explained that direct debits are calculated based on forecasts made during periods of volatile unit prices.
Customers can, however, request refunds.
The arrangement is structured to guarantee that customers maintain larger credit balances when approaching the winter months in September and October.
Ofgem, the energy regulator, emphasised that “customers have the right to request their balance back at any time and should receive a prompt refund.”
Energy Live News has contacted Ofgem for comment.
https://www.energylivenews.com/2023/10/09/energy-suppliers-hold-8-1bn-of-customers-money/
Wholesale gas prices hit mid-February high
UK wholesale gas prices have recently reached their highest levels since mid-February, with prices peaking at nearly 135 pence per therm on a Friday afternoon.
This follows a previous surge to nearly 123p per therm earlier in the week, marking a six-month high not seen since early April.
The increase in gas prices raises concerns about its potential impact on household bills.
Electricity costs in the UK are closely tied to wholesale gas prices, and this surge may lead to higher energy bills for consumers.
Energy Analyst Jess Ralston from the Energy and Climate Intelligence Unit said: “This is a reminder that without the shift to renewables and electric heat pumps, the UK is increasingly at the mercy of this kind of gas price volatility.
“The North Sea won’t help us as the price of gas is largely set internationally and more drilling won’t bring down bills. Had the government’s home energy efficiency schemes not been in decline, more families would be insulated from high bills this winter, but instead many will be colder and poorer.”
https://www.energylivenews.com/2023/10/13/wholesale-gas-prices-hit-mid-february-high/
UK ministers scrap energy efficiency taskforce after six months
The government’s energy efficiency taskforce, charged with reducing the UK’s energy use by 15% by 2030, has been scrapped months after it was established.
The group, which was overseeing an initiative to insulate homes and upgrade boilers, was announced by the chancellor, Jeremy Hunt, in his autumn statement last year as part of plans to boost investment in energy efficiency.
Energy industry responds to proposed bill increases
Experts are advocating for the implementation of social tariffs and help-to-repay schemes as a solution to the energy debt crisis.
Energy debt in the UK has skyrocketed to a record-breaking £2.6 billion, according to the latest figures released by the energy regulator.
This alarming surge is being attributed to the relentless rise in wholesale energy prices, the ongoing energy crisis and the broader challenges of an increased cost of living.
Ofgem has initiated a consultation to consider a one-time adjustment to the current energy price cap.
The proposed adjustment could temporarily raise average consumer bills by up to £17 per year, or approximately £1.50 per month.
Responding to the news, National Energy Action Chief Executive Adam Scorer has stressed the urgent need for additional targeted support, including the establishment of a “Help to Repay” scheme and a sustainable social tariff.
Simon Francis, Coordinator of the End Fuel Poverty Coalition, said: “Households are struggling under the huge weight of energy debt – which has been caused through no fault of their own, but by record energy bills.
“All this time, energy firms have continued to profit from the misery of people racking up debt and living in cold damp homes.
“Rather than pass on more increases to energy bills, the government needs to work with energy firms to introduce a ‘help to repay’ scheme to help get Britain’s households back onto an even keel.”
https://www.energylivenews.com/2023/10/12/energy-industry-respond-to-proposed-bill-increases/
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