Turning the lights off earlier?.

Everyone is feeling the pinch as energy prices continue to rise with all of us wondering when it will end. Energy costs and inflation have risen purely because of Russia’s actions in Ukraine. It’s not just energy but this year’s food crops and probably next year’s as Ukraine was also a major manufacturer of fertiliser. How has it come to this? Well, the west did nothing whilst Russia used chemical weapons in Syria, invaded Crimea, and blatantly murdered people on the streets of England. The west ignored these acts of aggression, appeased the aggressor, and built more infrastructure to become reliant on Russian gas.

Like all bullies, Putin thought he could do what he wanted so invaded Ukraine safe in the knowledge that Europe was weak and powerless to stop him, relying on his energy for our economies. Whilst correct in the short term this turned out to be a significant long-term miscalculation. His actions united not just Europe but the west as well as fortifying NATO. As President Zelensky said recently, Europe must suffer high energy costs whilst Ukrainians suffer missile attacks and death. It’s a small price to pay for freedom.

Has Russia just made another significant mistake? Nord 1 pipeline supplies Europe’s gas and when Putin shut it off for ‘maintenance’ the wholesale gas price rose again. This however was a good thing because it created certainty. It gave the peak price of gas if Russia stopped supplying and therefore everyone knows where they stand. Back in July everyone was demanding the Government take action over energy prices, if they had done so they would have had to rip up those plans and create a new one with the new price. Now the new Government can plan in the knowledge of the peak price i.e., the worst-case scenario. 

If, as widely expected, they freeze the gas price then inflation will fall as the price we pay will be lower than the actual price. That means pensions and universal credit will be cheaper to finance as they are linked to inflation. It also means interest on Government borrowing will be cheaper. It’s still a bad scenario as ultimately the taxpayer picks up the bill at some point, but it’s not armageddon. We also have an economy at full employment. It is calculated that we need 500,000 more people to fill the jobs we have create growth. Whilst there is some economic uncertainty, people are choosing to move jobs to gain pay rises to beat inflation.

As for energy the many of us who work from home or in hybrid fashion may start thinking of returning to the office to save energy costs? If the cost of a commute is low enough there is probably a saving.

So, are you turning your lights off earlier? Are you switching on the hot water only when needed and not on a timer? Instead of turning on the heating are you wearing more clothes? Are you hand washing your dishes instead of using the dishwasher? If we change our habits and use less energy there will be less demand. Less demand reduces the price and inflation falls again. And of course, the environment is a winner. It also means less revenue for Russia.

So, Putin has shown that he can use energy as a weapon as much as he can tanks. But he has played his hand. Europe is pivoting to create alternative energy sources and never be reliant on Russia again. It will take time but if Europe creates alternative energy products and chooses not to use Russian gas there will be an oversupply. The price will crash as will the Russian economy.

In the meantime, maybe turn off your lights earlier. You can find energy saving tips here https://energysavingtrust.org.uk/top-five-energy-consuming-home-appliances/​