The Energy Crisis: Is Brexit causing our problems? No. And yes.

September 25, 2021

by Martin Odoni

The growing alarm over an imminent shortage of natural gas really is one of those issues that should not be about partisan politics. Like climate change, or the SARS-Cov2 pandemic, it largely belongs in the realm of objective science and mathematics, but, also like climate change, or the SARS-Cov2 pandemic, it has not been allowed to remain in that realm.

The argument has become entwined with Brexit, with Remainers absolutely certain that gas shortages are, like the shortage of dentists, caused by the British decision to depart the European Union. Brexiteers on the other hand, insist the shortages have nothing to do with Brexit at all.

Well, here, for what my understanding is worth (not much, as I am no expert on the fuel industry), is my take; both sides are more wrong than right.

With a bumbling imbecile like Boris Johnson running the country during a fuel crisis, this could become a rare sight in the near future

Firstly, the root cause of the shortage – and it really shocks and pains me to say this – is more or less what Boris Johnson says it was. Yes, I am actually saying that Boris Johnson has told the truth about something. This phenomenon of honesty from the Prime Minister, a largely abstract concept prior to this week, I put entirely in the Even-a-broken-clock-is-right-twice-a-day bracket, and like the head of Ofgem, I am far from confident about Johnson’s prediction that the crisis will only be a short-term problem. But nonetheless, his claims that the shortage is caused by the pandemic are roughly correct. (His claims from before the 2016 Referendum that Brexit would lead to cheaper gas bills, on the other hand…)

To put meat on the bones; during the pandemic, industry was massively reduced globally as most countries observed lockdowns. Gas production thus declined and many gas-producing facilities even went offline altogether. Now that lockdowns are ending and industries are resuming, these suspended gas-producing facilities have to get started up again, and like the steamrollers of metaphor, they take a long while to get up to speed. Thus gas production is slower than consumption for the time being, and stored-up reserves are being used up in a hurry.

Russia in particular is having a big problem getting production back up to where it was two years ago, and as Russia is one of the biggest suppliers of gas to Europe and Asia, that is leaving a big shortfall.

This would have happened irrespective of Brexit, so we certainly have to say No when asked whether Brexit is the root cause of gas shortages in the UK. This will infuriate Remainers, many of whom have held it up as an extra example of Brexit causing harm. (Not sure why they need one when there are so many other, genuine examples, but I digress.) Brexit played no role in causing the shortages.

However, before we get a display of self-satisfied grandstanding from the usual mob of obstinate right wingers, I must stress that Brexit is still playing a damaging role that has exacerbated the crisis in the UK, as media across the continent are pointing out. Partly, the shortage of heavy goods vehicle drivers in the UK has become so severe that there are not enough for shipping tankers of fuel around the country, including gas transports.

But far more than that, as part of British withdrawal from the EU, the country left Europe’s Internal Energy Market (IEM) back in January. The IEM has a ‘pool’ of fuel supplies that all members have automatic access to, subject to daily ‘auction’, and on leaving that mechanism, the UK became ‘uncoupled’ from the processes that regulate automatic receipt of supplies. Well, it is a little more complicated than that, but this is what it amounts to. Learn more by clicking here.

The UK is therefore now allocated supplies via a completely separate process, which is slower and more complicated, and lower priority. To the best of my knowledge, by the way, this is not some act of spite by the EU, it is a necessary condition of importing fuel from the Single Market to outside. The energy deal Johnson signed up to late last year was noted by commentators to be storing up more trouble for the future, and this is just one aspect of it, already materialising after less than ten months. This will change when a new energy deal allowing direct access to the IEM is agreed, but the earliest that might happen is March next year, with some pessimists doubting it will happen until 2026. The Tories keep talking about seeking an arrangement with Norway in the meantime to cover the shortfall. But the complication there is that Norway, despite not being an EU member, is part of the IEM. Therefore British access to their gas exports will be subject to those same talks over regaining direct access to the IEM.

So Brexit has crippled the UK’s ability to cope with the developing fuel shortages, hence why prices are surging quicker here than in most of the EU, and why UK supplier companies are not just making losses, but actually folding under the pressure.

The general penny-pinching stupidity of Tory Governments over the last eleven years has played a broader role in the current troubles too. A 2012 Parliamentary paper analysing the health of the British energy sector recommended that Britain’s gas storage capacity would need to double by 2020. David Cameron’s Austerity-fixated administration just ignored it. Then, in 2015, the National Grid carried out a study into the likely effects of Brexit on the energy market in the UK, concluding that any benefits would be minimal, while the impact would be mainly negative. One of the dangers the study warned of was the aforementioned ‘de-coupling’ from the IEM’s gas network leading to higher costs. The one saving grace of this was that actually running out of gas was only a remote possibility due to the high excess storage capacity the UK still possessed. The country would have to lose about 70% of its gas storage to suffer an interruption in supply to domestic consumers.

So just avoid losing 70% of the sector’s capacity and you’re laughing, Tories. But… oh no, you don’t mean you actually DID lose 70% of the sector’s capacity?!?

Just two years later, Theresa May’s coalition-of-chaos seemed to interpret this as a recommendation rather than a line not to be crossed. They gave permission to Centrica, the denationalised owner of British Gas, to sell off 70% of the UK’s gas storage capacity, including all inland storage sites, and Rough, the nation’s biggest offshore storage site. (Nods of acknowledgement to John West and Jim Grace for much of this information.)

So we are now at the point where the UK’s entire gas storage capacity is ‘exactly enough’ to cope, and no more, provided all prevailing circumstances are clement. And as we have established, prevailing circumstances are not clement, far from it. Just four years after we had loads of excess capacity, we are now on the edge of choking.

Why do people still believe in Tory cuts and sell-offs? There is a reason we have these facilities that they love to flog at giveaway prices, why assume their sale will do the country any good?

This has been a time-bomb ticking beneath our feet for ten years. The ticking must have been deafening to the Tories, who pretended not to hear it for fear of having to spend money on something other than warfare. The result is that we are in trouble. Again. The UK’s miserly, xenophobic myopia keeps getting it into easily-averted difficulties, difficulties the Tories never apologise for marching us into. We are already in trouble over inability to ship fuel around the country due to driver shortages. Now we are in danger of not being able even to get some fuels into the country at all.

And once again, as is almost always the case when it is the British getting into trouble, so much of it was completely unnecessary.

3 Responses to “The Energy Crisis: Is Brexit causing our problems? No. And yes.”

  1. marijo1951 Says:

    Thanks Martin for this useful summary. It’s always good to be aware of the reasons for a calamity.

    At the moment I’m getting ready for my energy provider, Igloo, to go bust. I changed to them from Eon 3 months ago on the advice of the saintly Martin Lewis. Igloo’s website was optimistic until yesterday – they’re now more equivocal. All the pundits (including Martin Lewis) believe they’ll be finished very soon. I’m probably going to find myself paying more than I did with Eon. I’m on a low income but can probably absorb the extra cost with careful management. I feel so angry on behalf of those already on the breadline who will have to cope with increased energy costs on top of everything else.

    This takes me back to 1987 when I did temp work for the Manpower agency. They had plenty of work avaiable on the various privatisations that were in process at the time, including both gas and electricity. I was considered by some as a charming eccentric, by others as a dangerous Marxist, because I refused to work on any of these projects, being opposed in principle to what was happening. We can’t say what state we would be in if energy supplies were still in public ownership, but surely it would be better than the current mess.


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