We're staying in a one-room apartment in Spain for vacation, so we've been switching on the news in the morning whilst eating breakfast. The news has been absolutely chock full of wildfires and droughts and heat warnings and this morning, torrential rains in St. Louis that caused flash floods. So yeah, signs of the Apocalypse that is climate change, met with the usual indifference in the corridors of power. Boring.
Something out of the ordinary that caught my eye was that according to UK charity National Energy Action rampant inflation, coupled with surging energy prices, could mean that 33% of UK households could be in fuel poverty this winter:
From October National Energy Action predicts 8.2 million UK households could be in fuel poverty – that’s one in three. It comes after Cornwall Insight predicted the average annual energy bill could reach £3,250 – that’s £270 a month. Currently, around 6.5 million UK households are in the grip of fuel poverty, unable to afford to heat their homes to the temperature needed to keep warm and healthy.
The solutions being talked about in the news are the usual ones: capping energy prices (a good start) and/or subsidies to the poorest households to help them afford to heat their homes.
Of course it's completely beyond the pale to suggest an actual solution to the problem: return control of energy generation and distribution and provide energy at cost. Or even below cost, subsidised by taxes. Or even for free, as a basic human right.
Reagan and Thatcher and Clinton and Milton Friedman and company all assured us that deregulating the energy market and privatising public power would lead to lower energy prices through the power of competition, but according to the MIT Center for Energy and Environmental Policy Research, this has not been the case:
electric deregulation in the U.S. has resulted in increased prices from market power, and that this effect has dominated cost efficiencies. Though there was early awareness of the potential for market power in deregulated markets, the fact that the effects of market power could considerably exceed the savings from increased cost efficiency is surprising. Our findings point to the importance of careful market design and market monitoring in electricity markets to guarantee that consumers benefit from the cost savings that resulted from deregulation.
In addition to leading to lower prices, moving energy back into public hands would mean that the process of moving to renewable energy generation would not be able to be held hostage by a small number of executives, board members, and powerful shareholders (often large hedge funds like BlackRock), concerned only with the profitability of such a move.
When it comes to ensuring that power can afford to heat their homes in the winter, the approach of giving people money to give to private companies who are often recording record profits as prices rise is a much less efficient way to use taxes than providing power as a public good, but of course it has the happy property of perpetuating the current state of affairs, wherein a small handful of incredibly wealthy people get wealthier whilst the rest of us slide into food and energy insecurity.
Discuss this post here.