Energy Bills

[foreveryoung]

6 hours ago, CVByrne said:

a large issue with the fuel costs is the strength of the Dollar against the pound.

$70 a barrel is around what we've normally paid between 2015 and 2021 (excluding the collapse in prices during Covid). Just over a year ago the exchange rate to Dollar was $1.40 to the pound and now it's $1.2 to the pound.

Oil rose to $120 in June this year. That's a 70% increase in oil price from the $70 is was just over a year ago. But when you factor in the exchange rate change it's a 100% increase. The strength of the dollar is damaging and causing even more inflation in other countries as a result. We're being doubly hit

Everyone understands the price of a barrel of oil has gone up. But it shouldn't be on the consumer to still fund the energy companies billions in profits. Sometimes those billions need to take a hit, like your shops at the train stations when they strike, or the shops at the airports when they cancel 1000s of flights. It's not fair we should be funding the billionaire share holders with money we don't have.

[Genie]

42 minutes ago, foreveryoung said:

Everyone understands the price of a barrel of oil has gone up. But it shouldn't be on the consumer to still fund the energy companies billions in profits. Sometimes those billions need to take a hit, like your shops at the train stations when they strike, or the shops at the airports when they cancel 1000s of flights. It's not fair we should be funding the billionaire share holders with money we don't have.

This was the idea that cost of living payments should be funded by a windfall tax on the energy companies raking in billions. Future ones should be funded by them also.

It all sounds quite sensible so naturally the Tories are against it. Saying that they are well overdue a big U-turn so fingers crossed.

[CVByrne]

57 minutes ago, foreveryoung said:

Everyone understands the price of a barrel of oil has gone up. But it shouldn't be on the consumer to still fund the energy companies billions in profits. Sometimes those billions need to take a hit, like your shops at the train stations when they strike, or the shops at the airports when they cancel 1000s of flights. It's not fair we should be funding the billionaire share holders with money we don't have.

Read back in the thread. The companies producing the oil and gas don't set the prices. Like a grain farmers don't set the price for their grain. When prices are very low they don't make money or they lose money. When prices are high they make money. I bang my head on the desk every time people blame the energy companies. 

Then the energy suppliers were going out of business left right and centre because of the energy price caps. 

People are obsessed with assigning blame. There are lots of factors that have caused this and rampant money printing by central banks is a big factor. The war in Ukraine is a big factor. Supply chain disruption due to Covid is a big factor. 

British Gas and British Petroleum are not the ones to blame. 

[CVByrne]

23 minutes ago, Genie said:

This was the idea that cost of living payments should be funded by a windfall tax on the energy companies raking in billions. Future ones should be funded by them also.

It all sounds quite sensible so naturally the Tories are against it. Saying that they are well overdue a big U-turn so fingers crossed.

Well if we did that then the government should subsidise those companies when energy prices drop so low they lose money also. 

If we didn't then there would be capital outflows from these companies and they couldn't be finding new supplies of oil and gas for the future because if they ever made any large profits they would have that windfall taxed. This would then mean less and less future supplies of oil and gas and prices would rise higher and higher over time as supply dropped

Edited July 13, 2022 by CVByrne

[foreveryoung]

5 minutes ago, CVByrne said:

Read back in the thread. The companies producing the oil and gas don't set the prices. Like a grain farmers don't set the price for their grain. When prices are very low they don't make money or they lose money. When prices are high they make money. I bang my head on the desk every time people blame the energy companies. 

Then the energy suppliers were going out of business left right and centre because of the energy price caps. 

People are obsessed with assigning blame. There are lots of factors that have caused this and rampant money printing by central banks is a big factor. The war in Ukraine is a big factor. Supply chain disruption due to Covid is a big factor. 

British Gas and British Petroleum are not the ones to blame. 

But they still turn out billions in profit every quarter, moreso when we pay more. So why can they not take a hit??

[CVByrne]

1 minute ago, foreveryoung said:

But they still turn out billions in profit every quarter, moreso when we pay more. So why can they not take a hit??

So they're only allowed to make losses or a level of profits we decide for them? During Covid they lost massive amounts of money and demand essentially stopped so prices collapsed. Now prices are high they are making money. The prices will drop in 12 months time and they'll be back to level again. That's the way global supply and demand works for commodities like oil, gas, what, corn,  coffee etc..

If we come in and say the will be taxed at 80% of profits over x that means any time oil and gas prices are high when demand is high they have capped profits. Whenever the prices plummet from over supply or lack of demand they make losses. Why would anyone invest capital in businesses like that? 

When capital moves out from the Energy sector then they can't afford to drill and find new supplies of oil and gas. The demand is still there though. So now oil and gas prices go up and up and up because the supply drops. The supply drops as I said because the capital investment stopped. That puts us in an even worse position than now.

We are part of a giant global economy with huge forces nobody is directly in control of. We need to accept the war in Ukraine happened, we can't control that. We printed massive amounts of money to pay people to stay at home during covid that is masses more money in existence with no increase in the stuff alongside it. That drives all prices up. 

We need to accept the situation we are in and government can help to a degree in cutting VAT / fuel duty and giving support to low income households until the oil and gas prices drop again. 

[Genie]

26 minutes ago, CVByrne said:

Well if we did that then the government should subsidise those companies when energy prices drop so low they lose money also. 

If we didn't then there would be capital outflows from these companies and they couldn't be finding new supplies of oil and gas for the future because if they ever made any large profits they would have that windfall taxed. This would then mean less and less future supplies of oil and gas and prices would rise higher and higher over time as supply dropped

Its not an all or nothing situation. I don’t think anyone is suggesting they are taxed into a loss either.

Whilst they are benefitting massively from something out of their control and millions suffer it seems sensible to strike a balance where everybody benefits to a degree.

If they were in a very unlikely position where they were going broke I would fully expect them to get government support.

[CVByrne]

3 minutes ago, Genie said:

Its not an all or nothing situation. I don’t think anyone is suggesting they are taxed into a loss either.

Whilst they are benefitting massively from something out of their control and millions suffer it seems sensible to strike a balance where everybody benefits to a degree.

If they were in a very unlikely position where they were going broke I would fully expect them to get government support.

Or we just leave companies alone. The Government can help people out still as this whole situation is temporary. Ultimately it's the governments actions that will help people who need it and the Government can fund it via budget shortfall and more debt. As the ones who benefit the most from inflation is the Government as the debt they owe is worth less and less due to the inflation. Inflation is essentially a secret tax after all. 

[foreveryoung]

4 minutes ago, CVByrne said:

Or we just leave companies alone. The Government can help people out still as this whole situation is temporary. Ultimately it's the governments actions that will help people who need it and the Government can fund it via budget shortfall and more debt. As the ones who benefit the most from inflation is the Government as the debt they owe is worth less and less due to the inflation. Inflation is essentially a secret tax after all. 

I very much doubt this is temporary. I cannot see our energy bills returning to where they were and fuel is never gonna drop to less than £1.50 a litre ever again, even if the barrel of oil drops back to original levels.

[CVByrne]

25 minutes ago, foreveryoung said:

I very much doubt this is temporary. I cannot see our energy bills returning to where they were and fuel is never gonna drop to less than £1.50 a litre ever again, even if the barrel of oil drops back to original levels.

Well they will, it's just a matter of when. Once a recession hits and the supply ramps up the prices will come down. That's how it works. These oil prices aren't unprecedented we've been here before 

[foreveryoung]

6 minutes ago, CVByrne said:

Well they will, it's just a matter of when. Once a recession hits and the supply ramps up the prices will come down. That's how it works. These oil prices aren't unprecedented we've been here before 

But there wasn't so much green energy before. Electric cars, heat pumps, solar. Supply will be dropping in the next years surely?

[Genie]

1 minute ago, foreveryoung said:

But there wasn't so much green energy before. Electric cars, heat pumps, solar. Supply will be dropping in the next years surely?

Demand will drop, maybe price will come down to encourage it being used?

[CVByrne]

10 minutes ago, foreveryoung said:

But there wasn't so much green energy before. Electric cars, heat pumps, solar. Supply will be dropping in the next years surely?

No, because to build the green economy we need lots of materials and energy. It will take decades to do that and we will use lots of fuel to do that and that's oil and gas. 

Electricity comes from burning oil, gas, coal. It comes from nuclear power and small parts hydro, solar, wind. 

Also we have a planet that has more and more energy demands. So demand is rising too

 

[CVByrne]

Petrol prices were £1.45 in 2012 up from a low of £1 a couple of years before. They eventually hit £1 on 2015/16. Now we've got £2 up from £1.35 before covid. So we've had 40-45% increase in fuel prices in both those times and then a return to where prices were.

These things happen. People just have short memories 

[Davkaus]

You're right things are likely to settle and drop back down. Them going back to normal in a few years is probably small comfort to people queuing in food banks though

[Davkaus]

22 minutes ago, CVByrne said:

 

Electricity comes from burning oil, gas, coal. It comes from nuclear power and small parts hydro, solar, wind. 

 

 

On a global level, sure. In the UK (and he EU), not so much. Renewables account for somewhere between 40-45% of our electricity generation, and have been surpassing fossil fuel generation for a couple of years or so.

[foreveryoung]

14 minutes ago, Davkaus said:

On a global level, sure. In the UK (and he EU), not so much. Renewables account for somewhere between 40-45% of our electricity generation, and have been surpassing fossil fuel generation for a couple of years or so.

There is no doubt this is also increasing the cost of energy and will continue to do so.

@CVByrne So your saying when 50% of new cars being sold are electric, the cost of energy will be much lower, I just don't see it. 

[CVByrne]

18 minutes ago, Davkaus said:

On a global level, sure. In the UK (and he EU), not so much. Renewables account for somewhere between 40-45% of our electricity generation, and have been surpassing fossil fuel generation for a couple of years or so.

True but that's only 6% of our total energy consumption. Which is a fraction 

[CVByrne]

2 minutes ago, foreveryoung said:

There is no doubt this is also increasing the cost of energy and will continue to do so.

@CVByrne So your saying when 50% of new cars being sold are electric, the cost of energy will be much lower, I just don't see it. 

It's simply supply and demand. Demand comes from population and increased our energy consumption. Supply comes from the various sources of energy. Fracking has lowered the cost of oil and gas because it's increased supply. 

I'm not predicting where energy prices will be. I'm saying the demand for fossil fuels will stay high for quite some time globally despite the move towards green energy 

[sidcow]

1 hour ago, foreveryoung said:

But there wasn't so much green energy before. Electric cars, heat pumps, solar. Supply will be dropping in the next years surely?

The amount of green energy being installed is massively outnumbered by increased demand for fossil fuels in India, China and America.