[CommanderData]

We have a corrupt government and media that itch each others back. There's still a complete lack of urgency.

A potential new prime minister trying to defend profits of energy companies recently on TV just shows you the Modus operandi of the political class.

It might push people to riots in the streets.

[bko]

From the article:

>The investment bank predicted that the country’s retail energy price cap — which limits how much households pay for heating and electricity — would be raised to £4,567 in January and then £5,816 in April, compared with the current level of £1,971 a year.... Nabarro said Citi’s new forecasts had taken account of a 25 per cent increase in wholesale gas prices last week and a 7 per cent rise in wholesale electricity prices.

No price controls can account for the fact that energy prices are up a lot globally. Pretending they're not up and keeping the price cap in place is worse. First it doesn't discourage energy usage. That's a big purpose of prices in a market economy. Second, when something is priced below market price it inevitably leads to shortages. This will have to be addressed through some kind of political action that will be sub-optimal. Rather than a young person seeing higher energy prices and adjusting their AC, while an old person may choose to pay the higher price, you'll see ham-fisted conservation measures.

If you're against having the customer's price reflect more closely the market price, you have to propose an alternative. Do you want people to use less? If so, how do you do that? Or do you want people to continue using the same, pretend the high prices don't exist and just pay for it through taxes? Either way, the money will have to come from somewhere or rationing will have to take place. There's no free lunch

[minimaul]

This is well beyond ‘market prices will fix this’ - market prices will mean a very large chunk of the population will literally be unable to afford to cook dinner and heat their houses.

We already don’t have AC in summers which are growing more and more extreme (regularly over 90F, and sometimes over 100F) - there’s nothing there to turn off.

Edit: Big power retail companies in the UK are making record profits, and so is generation.

Tax that aggressively to start with.

[bko]

> Edit: Big power retail companies in the UK are making record profits, and so is generation.

The largest gas provider in UK (British Gas) profits in millions of pounds:

2009 147

2010 226

2011 258

2012 291

2013 153

2014 96

2015 73

2016 43

2017 11

2018 8

2019 -5

2020 27

I couldn't find more recent data but please provide it if you have it. These are in millions of pounds. Suppose their profit jumped to 100 million pounds (4x the 2020 profits). Do you think 100 MILLION pounds would solve the problem? To put this in context, public sector fuel and energy expenditure in 2021 was 456 BILLION. And this is only public sector. Profits aren't even a rounding error.

https://www.statista.com/statistics/521474/centrica-energy-e...

https://www.statista.com/statistics/298887/united-kingdom-uk...

[minimaul]

https://www.bloomberg.com/news/articles/2022-07-28/profit-bo...

As an example for more recent information.

[bko]

I would look at the company's financial statements. The article doesn't really provide much insight. I took Centrica, which was mentioned in the article and looked at their 2022 results ending on June 30th 2022:

> British Gas Services & Solutions adjusted operating profit fell by 88% to £7m.

> The reversal of a £50m Covid-19 and industrial action impact from H1 2021 was partially offset by an increase in customer compensation following disappointing service levels over the past winter, continued higher absence rates earlier in the year, and increased workload, which we believe is a function of customers choosing to have non-urgent jobs they had been delaying during the Interim Results | Group Overview (continued) Centrica plc Interim Results for the six months ended 30 June 2022 7 Covid-19 pandemic completed. These temporary factors negatively impacted adjusted operating profit by approximately £25m

It's difficult to tease out, but the profit numbers are so tiny compared to the aggregate increase in price experienced by consumers. I think focusing on profit makes for good headlines but underlying issues are a lot bigger. Taking away the tiny sliver of profit these companies have will reduce innovation and new entrants while doing absolutely nothing to alleviate higher consumer prices.

https://www.centrica.com/media/5723/centrica-2022-interim-re...

[gruez]

> This is well beyond ‘market prices will fix this’ - market prices will mean a very large chunk of the population will literally be unable to afford to cook dinner and heat their houses.

Advocating for "market prices" doesn't necessarily mean letting everyone fend for themselves. You can provide grants/subsidies for the poor, while still keeping market prices so everyone is still incentivized to save as much energy as possible.

>Edit: Big power retail companies in the UK are making record profits, and so is generation.

Sounds like a great way to discourage investment and make future shortages even worse. The energy industry runs on a boom-bust cycle. Why bother investing for the boom years (ie. right now) when you know the government is going to seize all your profits?

[AlexandrB]

Why bother investing at all when you can just buy back stock and make the owners/CEO rich[1]? If you think these companies are sinking their profits into investing for the future, you're dreaming.

[1] https://financialpost.com/investing/energy-firms-pay-record-...

[gruez]

1. As per BP's Q12022 reports, their capital expenditure was $2.9B compared to $1.6B of buybacks. Is that too much? Too little? I don't know. However, I do think your characterization is way too simplistic.

2. the boom-bust cycle is exactly the reason not to reinvest all the surplus profits now. You might intuitively think that investing now will help lower oil prices, but it takes years for an oil project to be online so by the time the project is complete there will be an oil glut.

https://www.bp.com/content/dam/bp/business-sites/en/global/c...

[tomjen3]

The problem is that there isn't enough gas being produced because of the war. The solution to this is to make the gas companies pay war profiteering taxes (say 98%) as their income is soaring because of a war, and use the money to invest in other ways to heat homes. Scotland has a lot of coal, why not start looking at creating coal gas?

Heat pumps would be better, but there is already an insane queue for those.

[mvc]

> No price controls can account for the fact that energy prices are up a lot globally.

Sure, but how would these energy companies fancy being under the thumb of Putin.

If they want to benefit from the spoils of free markets with consumers who haven't died from covid then they must pay their fair share to maintain them. So whether it's a cap on the prices they can make, or a tax on their profits. Doesn't really matter. The burden cannot be met only by energy consumers.

[robertlagrant]

All of that is still paid for by consumers, and we already tax profits. Where do you think the money (including the profit taxes) comes from? Consumer prices.

[mvc]

They are making record profits

https://www.bbc.co.uk/news/business-62382624

Not from any particular clerverness. Or increase in productivity. Purely because of abnormal market conditions due to a war waged by a dictator they have collaborated with for the last 20 odd years.

[robertlagrant]

That doesn't mean that taxes would lower prices, or keep them the same. Taxes raise prices.

Also, that article doesn't make sense to me. What stopped the prices rising before?

[gyre007]

I don’t believe Brits are capable of revolting against this. They did hit the streets in anti-lockdown protests though, which is ironic because in the grand scheme of things that (lockdown) was temporary, but this inflation wave will be madly felt for quite long.

[cirrus-clouds]

Imagine if French citizens were facing energy bills as high as the UK (£5,816, €6850). French citizens would never tolerate such levels.

From Reuters: "France has committed to capping an increase on regulated electricity costs at 4%. To help do this the government has ordered utility EDF (EDF.PA), which is 80% state owned, to sell more cheap nuclear power to rivals"

(Source: https://www.reuters.com/business/energy/europes-efforts-shie...)

[makomk]

France really feels like they're building towards serious trouble in the near future. The gap between the discounted electricity costs paid by consumers and the actual underlying wholesale prices is only widening (to the point I think they may even have the lowest consumer costs and highest wholesale prices in Europe, or at least not far off), and that basically all has to be subsidised by the government using debt. They're also part of the Eurozone which is founded on common agreements on government debt, and they're at twice the debt cap and rising. The general consensus is that they cannot stop doing this without serious civil unrest and likely widespread rioting which seems well founded in past events. Energy prices are not the only problem - they have more generous retirement policies than other countries, for example - but changing those other things is just as intolerable.

[mytailorisrich]

They are finalising the full nationalisation of EDF, their main electricity supplier and owner/operator of their nuclear power plants.

Then, the electricity wholesale price on the open market becomes irrelevant. As long as their set a price that covers their actual costs for their own consumers they are fine and it is sustainable, and certainly does not require any debts since it does not actually cost anything (beyond the cost of buying the remaining 20% of EDF).

[AlexandrB]

Privatizing everything is great when things are going well. When the shit hits the fan it's nice for elected representatives to be able to force essential utilities to lose money.

[M2Ys4U]

Privatise the profits and socialise the losses.

[NickRandom]

Ah, but what many might not grasp about (British) politics is that when the S.H.T.F it is traditional for the UK to vote in the 'other lot' (be that Labour or Conservatives) since the current lot 'are a useless bunch of twats'. This has the advantage of the 'new' government being able to blame all the current problems on the 'old lot'.

Rinse and Repeat ad infinitum

[wesleywt]

The anti-lock down protesters were a fringe group. An energy crisis is different matter. It will not only affect the lunatic fringe, this will affect everyone.

[throwawaythekey]

It would be an interesting case study for leaders around the world - confiscate a huge chunk of liberty and you will have a fringe protest, lose a few thousand pounds from chequebooks and you will have blood.

[happymellon]

I don't think anyone I know here in the UK saw a temporary lockdown as "confiscating a huge chunk of liberty".

On the contrary, we recognise that everyone has a duty to keep everyone else safe, which was especially true during the early pandemic times, when it seemed like it was quite dangerous and Americans ignored it and died in the tens of thousands.

It was when it was observed that we were not in it together that heads rolled.

And it looks like our observations panned out, as we do not have any lockdowns anymore and I don't know of anyone who is still getting sick in a bad way.

[pydry]

The lockdown protests kind or proved to me that while english people are getting angrier overall, they seem to be getting progressively dumber about how they lash out.

I could foresee riots again like the 2010 ones but I doubt it'd do to much change other than lead to some imprisoned people and property damage.

So, unlike, say, the poll tax riots i doubt itll lead to any meaningful British/English political changes.

It may add fuel to Northern Ireland joining Ireland/Scottish independence though.

[philk10]

They hit the streets with the Poll Tax riots

[mellosouls]

Didn't happen with the bankers 10 years ago, I'm not sure that normal people have the inclination or fight.

[blowski]

Some would say they rioted in the ballot box, via the Brexit referendum.

[yourusername]

While a lot of people lost money during the banking crisis a lot of people were unaffected. The current inflation crisis means the bottom quartile will probably start to go hungry and be unable to afford to heat their homes. It's not like those people were saving 20-30% of their income 2 years ago and they're now spending 20% of their income on heating and their groceries got 20% more expensive and fuel (for driving) increased by 50-100%.

[sudden_dystopia]

True but that was “just” a bad recession, but we never actually recovered from it. Now we are the brink of global war, reeling from Covid supply chain issues, and stagflation all on top of a world economy that has been propped up by central banks for the past decade while simultaneously exploding the money supply and essentially making internet rates zero.

This is the world on modern monetary theory. Not even once.

[mattmanser]

Most UK cities had big occupy protests, we had one in my city in the UK for quite a while.

[robertlagrant]

They collectively did far less to the financial industry than some people on the internet buying Gamestop.

[ojhughes]

The only thing that would cause us Brit’s to riot is a change to caravanning laws

[jollyllama]

The ever-prepared Swiss are preparing for the possibility of riots this winter. https://www.blick.ch/politik/oberster-polizeidirektor-fredy-...

Hyperinflation and energy crisis are here.

[ninjin]

Best of luck. Although I would state that the English Civil War in many ways could be argued to be a mislabelled real revolution [1].

[1]: https://en.wikipedia.org/wiki/English_Civil_War#Whig_and_Mar...

Edit: For context, the parent previously stated that this perhaps may become the first real revolution in Britain.