The government now faces the full consequences of its energy policy. Global disruption has pushed oil past one hundred dollars per barrel and lifted wholesale gas by more than fifty per cent – ministers must warn that they could step in on bills plus at the pump. The Middle East conflict revives the cost-of-living pressure that already gripped Westminster last year. Officials have reopened emergency files and they expect to choose any new support package long before summer. The move shows that the official price cap no longer holds costs down but also works more like a thin bandage on a serious break.
Ed Miliband, who leads the Department for Energy and backs clean power, has toured studios to say the government prepares for every outcome but he offers no firm measure. He told the BBC that if action proves essential, the government will act – the sentence keeps every option open as well as leaves households uncertain. The first concern is petrol. Data from the RAC show pump prices at an eighteen month peak and family budgets still bear the scar of the last surge. Miliband suggested the Chancellor could cancel the fuel duty rise set for September but he gave no pledge. He added only that five months remain or that the position will be reviewed nearer the time. Drivers might be forgiven for wanting something more solid than philosophical musings about the passage of time.
The government has also managed to pick a fight with the very people selling the fuel, accusing some retailers of using the crisis as cover for price gouging. Miliband pointed to Competition and Markets Authority findings that suggested “persistently high” profits and weak competition at the pumps, a claim that went down like a lead balloon with industry representatives who reportedly threatened to boycott a Downing Street meeting. They attended in the end, presumably to tell the minister to his face that his comments were unhelpful. Miliband, to his credit, seemed unbothered, insisting that if the market is broken, they will fight for consumers even if it upends the cosy relationship with fuel sellers.
For those poor souls stuck on heating oil, mostly in rural areas and Northern Ireland where the gas grid is a distant fantasy, the crisis has already arrived with a vengeance. Unlike gas and electricity customers who enjoy the dubious protection of the price cap, these households have been exposed to the full force of crude oil spikes, with some reporting their costs have effectively doubled. The Prime Minister is reportedly preparing a fifty-million-pound support package specifically for them, a recognition that the state cannot simply watch while off-grid Britain freezes. Rachel Reeves, the Chancellor, has been particularly scathing about heating oil firms, accusing them of using the conflict as an opportunity to rip people off, and the competition watchdog has been told to get tough.
The irony is not lost on anyone that for the majority of households, energy bills are actually supposed to dip slightly in April, with Cornwall Insight predicting a seven per cent drop to around sixteen hundred and forty-one pounds. This temporary relief comes from government tweaks to how green levies are applied, shifting costs from bills to general taxation. But the reprieve looks fragile. The same forecasters are already warning that the July cap could jump back up to eighteen hundred pounds if wholesale prices stay elevated, a ten per cent increase that would wipe out the spring savings and then some. Britain, as a net energy importer, remains a hostage to global fortune, its domestic bills dancing to the tune of Gulf geopolitics.
The political blame game is in full swing, as one might expect. The Conservatives, through shadow energy secretary Claire Coutinho, are demanding the government implement their previously announced cheap power plan, insisting the first port of call should be cutting costs on bills before reaching for taxpayer cash. The Liberal Democrats, ever the voice of diplomatic solutions, suggest that calming the Middle East conflict might be a more effective approach than firefighting the economic consequences. Sir Ed Davey noted, with impeccable logic, that stabilising the region would do wonders for stabilising prices, though he perhaps underestimated the complexity of persuading warring parties to stand down for the sake of British petrol bills.
Miliband, for his part, has used the crisis to double down on his core message: the only real answer is to stop relying on fossil fuels altogether. He has flatly rejected calls to issue new North Sea oil and gas licences, arguing that Britain is a price-taker, not a price-maker, on global markets. The government has instead accelerated its renewable energy auction to July and announced that plug-in solar panels, the sort you can buy at a supermarket and hang on a balcony, will soon be available in Britain for the first time, a move borrowed from Germany where half a million such devices were installed last year alone. It is a vision of energy independence built on millions of micro-generation projects, which might just work, provided the sun shines and the geopolitical winds are calm. In the meantime, households will watch the pumps and the forecasts, hoping that the government’s promise to stand by them amounts to more than a warm political sentiment.
