Pity the small business owner in Great Britain! Imagine their feelings of trepidation as they are ready to renew their three-year energy contract with their local provider. They know the price of energy has been going up and the last contract was a just bearable $31,000 but the new contract has finally arrived. They open it and there must be a misprint! $135,000! (NYT, 9/3/2022, B1) No, it is not a misprint, it is the result of years of just in time energy deliveries (not enough storage), the war in the Ukraine and most importantly, two decades of green energy policies which has cut into the North Sea oil fields and stopped fracking.
Unfortunately, the above story is all too common in Great Britain today. Energy bills are going up 80% for homeowners and the new Prime Minister has moved quickly to put a cap on these increases for the next two years. The cost? About $115.35 billion or 4% of annual economic output. Given that the government debt is already at 95.5% of annual economic output, such subsidies will cause higher inflation for years to come. All this while estimates are that 100,000 businesses could close due to high energy prices. Meanwhile, hundreds of thousands of workers in transportation, trash services and energy have walked off their jobs to protest the excessive cost of energy and the resulting inflation.
Not the best of time to be the new Prime Minister! Fortunately, she has acted quickly and has eliminated the band on fracking and hopes are that it will pay off as soon as March 2023 which will help. Some people do learn and are willing to lead from the front.
The world is facing a crisis in its climate policies. The U.S. has gone from energy independence and being an exporter of fossil fuels to being an importer; will our leadership continue to ignore reality as Janet Yellen has (see link below) or will some adults appear and take the children in hand? The time for daydreaming and wistful ideals is over.
