The parochial nature of the energy discussion, not just for the home but also for businesses, is sickening. A friend who recently flew between here and Germany noted the many wind turbines visible from the air across Germany – that country is far ahead of us in harnessing natural energy sources and in integrating small scale generation with their national grid. USA energy companies are required to invest in energy conservation measures. Whatever you think about nuclear power (and I believe there is concern about the world’s resources of uranium), numerous countries have been funding a series of research programmes developing safer, cleaner nuclear power generation techniques – but, until very recently, we failed to contribute. There is a programme, pan-european and extending into North Africa, for an electrical super grid, stretching from Africa to Iceland, aimed at exploiting natural energy sources (sun, hydro, geothermal) for the benefit of all of us – and it will bring prosperity to the African countries involved. Yet we lack statesmen and women and civil servants who can and will set out a combination of policy, framework, law, investment and management to lift our contribution to a higher plane. Instead we have pygmies, the clueless, and the greedy ones, and the country seems to be run by a cohort of corner shopkeepers for whom cash flow is all. No wonder more and more people are sick of not just politics but also the civil service establishment.

dreamingspire,

I agree with your analysis. Especially the bit about the clueless. There appears to be no real commitment to an alternative energy strategy by anyone. And I’d include the Greens in that as they are anti-nuclear. Oil and Gas Companies pay only lip service to renewables. It is a strategic error of the first order to fail to protect your energy supply.

The trouble is that Labour spent time pandering to the media, basing policy (in part) on column inches, and they are reaping what they sowed. I wonder if it’s too late for this Government to be strong with the media, come what may.

Do we want ministers to be flexible or not?

Of course, but for the right reasons and at the right times. What gives me a wry smile is that the Government can be so dogmatic and stubborn about some issues yet seem so weak on others. I don’t believe that is entirely a picture painted by the media or imagined by me.

Good point Sunny although it just the nature of the game. When the government changes its mind in a way we agree with its being accountable etc when it doesn’t its a u-turn…

dreamingspire, a sobering but true analysis….

Some of us would just rather that the government doesn’t give in to socialists crying for us to take money from the rich, without *any* reality being applied as to how or why they’re rich, to maybe give to the poor…though not really.

Check out this link for more information on why some of us think it is drastically more important for Compass to be asking the government to simply sort out their own shit before applying taxes to those that happen to be more prosperous than others.

Nothing wrong with the Government listen to popular opinion, being persuaded by it and changing their position accordingly. The problem comes when they change their position because of popular opinion even if they think popular opinion is wrong.

Our leaders were naive or corrupt enough to give away carbon permits with a real cash value, leading to windfall profits. The energy companies passed on the cost of the permits to us customers as if they had had to buy them – this is correct pricing strategy which any competent company would do.

Would it make up for this criminal act of theft from the taxpayer and energy user, if the government now got its money back with a windfall tax? Doubtful – the culprit is the government not the energy company, and they have not exactly admitted culpability anyway.

And what happens next year if energy prices stay high? Another windfall tax? Or are we back to square one.

And is there no merit in the theory that high prices and profits are an essential market signal to producers to produce more of something or find alternatives?

No, Brown shouldn’t capitulate over windfall tax because it has no basis in equity and would be the wrong thing to do.

Sunny: a muddled post, surely?

Discussion 1: Windfall tax and possible ways to help the lower paid when energy prices rise.

Discussion 2: Political U-turns may be rational.

On discussion 2 I can agree, as long as “grassroots pressure” means doing the right thing rather than capitulating to populism.

Discussion 1 is very difficult. A windfall tax takes money from energy companies, reducing shareholder return which affects pension holders. Rebates deliver money to both the worthy and to those who can already pay their bills. Energy saving subsidies for house improvements do the same sort of thing, but the initial benefit is low for the poorest. Don’t even think about imposing domestic energy saving on energy suppliers; it isn’t in their corporate interest to do it until they wish to change their business.

Erm, its not the point I’m making though.

But one point:
The energy companies passed on the cost of the permits to us customers as if they had had to buy them – this is correct pricing strategy which any competent company would do.

What about raising prices by over 30% as their profits sky rocket? The energy companies are near natural monopolies. Normal rules don’t apply…

Charlieman, well… yeah I didn’t really intend to dredge up the Windfall tax argument again, but had to mention it in the context of my actual point…

The wholesale cost of gas is, by the winter, going to have risen by between 40% and 80% compared to April of this year…so why is a 30% rise unreasonable? I don’t agree that energy companies are absorbing lots of the costs, but they’re not really doing more than pass them on to the customer either. In this years case the political climate almost means they’re forced to take that former option of absorbing costs. I’ll say here what I said to others on the compass side of things…we shouldn’t be penalising companies for good business management, the profits energy companies (as utilities providers) are seeing are not because of charging customers any more for energy now than they were in 1997 (proportional to the cost of wholesale gas), it’s because they’re intelligent businesses investing, streamlining and offering other non-essential opt-in services.

Sorry Sunny, where is this monopoly? Are you talking about wholesale or retail energy, or both? You don’t fix monopolies by windfall tax anyway, but by breaking them up.

We seem to be discussing this issue as if high energy prices were caused by greed. I promise you that energy companies were just as greedy a few years ago when energy was cheaper. What is happening now is due to rising demand around the world and supplies not rising in step.

Prices can be brought down by increasing supply, by new investment in energy production. But do not despair, high prices and high profits are precisely what drive this new investment.

Obviously if gas and oil are limited, or if we want to prevent global warming, we may have to use more intrinsically expensive kinds of energy. High prices make this possible, they get that energy produced. If you have another way, by all means share it.

Charlieman,
“Don’t even think about imposing domestic energy saving on energy suppliers; it isn’t in their corporate interest to do it until they wish to change their business.”
Yes, taking into account all of the stakeholders (as required by recent companies legislation) and the risks associated with the current energy supply pattern, they should be taking steps to change their businesses. But we also need an enlightened and competent public sector to work with them (and us) – which is why we need the parochialism to stop and for us to look at how, for example, Germany, working under the same EU rules as us, manages to invest a lot more, not just in energy supply but also in public transport (and probably other things).

If Brown “capitulates” over windfall tax then he will be undoing one of the very few good decisions he has made in recent months. It is a terrible idea borne out of ignorance of economics and naivety of thought (Link).

If Brown/Darling (a) had a convincing set of reasons why not and (b) had an equivalent or better set of proposals, then it’s not a question of capitulation. On the other hand, ‘business wouldn’t like it’ and ‘we don’t do short term gimmicks’ (unlike that little business of a stamp duty holiday) don’t inspire confidence. Lastly, any decision taken has to have some kind of underlying rationale or ideology: the problem is, with New Labour, it may have far less to do with social justice than its spokespeople would like to claim.

Well since EU rules severely limit Brown’s ability to raise taxes like this, he might paradoxically be stronger if he did manage to “capitulate” to Compass. People don’t seem to have caught up with how limited our leaders really are.

The way for the Government to avoid looking like it is capitulating is to do something much bolder than but different to the windfall tax on electricity companies etc that is mostly being proposed: rather, there should be an eye-watering windfall tax on the fossil-fuel miners (i.e. on Shell, BP etc. — NOT on NPower etc.).
This is what the Green Party is calling for — go to the _source_ of the vast profits, not to the middlemen who supply us in our homes.

I thought the windfall tax proposed was on the “miners” as well as the other energy companies. John B has said more than anyone else could as to why both are stupid ideas.

Rupert, the government did put up the tax on oil extraction not so long ago. Not “windfall” but per-barrel, which is even better, right?