Europe is moving to a war footing - and so should Britain - by Ambrose Evans Pritchard - 21.07.22

Updated: Jul 27

A word of warning.

While the EU’s disastrous energy policy may be entirely self-inflicted, the UK hardly emerges with much credit in relation to its own domestic record, according to Ambrose Evans Pritchard in an article for Economic Intelligence in the Telegraph.

And while the EU has acted promptly (only today announcing an agreement to cut its use of Russian gas by 15%), the UK has remained remarkably complacent about the implications of the crisis on its own ability to get through the forthcoming winter.

“The UK is fully integrated into the European energy nexus, and furthermore it subcontracted winter storage to the Netherlands and Germany after closing its main gas storage facility at Rough in a fit of globalist madness in 2018. The UK has just five days’ reserve.

The logic of renewable expansion is greater gas storage, not less, since dispatchable gas (peaker) plants are the complement to intermittent wind and solar. Centrica has secured a licence to reopen Rough – tripling the UK’s total storage – but there is no agreement yet with the Government over who pays the bill. Is the Treasury blocking it?

In winter, the interconnectors go the other way. The UK relies heavily on gas and electricity imports from Europe during cold snaps from November to February, which tend to coincide with low-wind Dunkelflaute episodes in the North Sea. We must assume that these flows will not be forthcoming this winter. Britain will have to bid exorbitant sums to obtain global LNG when needed in a viciously tight market.”

For those in the know, time is of the essence:

“The energy price cap could go above £4,000, if you can get gas at all. I don’t think the Government yet realises this,” said a member of an industrial group that has presented an emergency plan to ministers.

They are demanding an immediate conclave of key LNG traders such as BP, Shell, and Vitol, to secure supplies this winter and beyond, because there is a structural shortage of global gas and the winter of 2023-2024 could be even worse. They want long-term LNG contracts instead of spot sales before China locks up the trade.

They want to fast-track the UK’s offshore fields of Cambo, Leverett, Rosebank, and Glengorm. They want a clear statement that drilling will be encouraged beyond 10 years, without which projects are uninvestable, and an end to destructive, soak-the-producer windfall taxes. They want coordinated gas purchases through the International Energy Agency to avoid a global bidding war.

On the current insouciant course, the UK risks a three-day working week and an institutional debacle of the first order this winter, discrediting the Conservative Party for a generation.”

And so far, not a mention of any of this from either of the Tory leadership contenders…

The full article can be found here with a link to the original below:

Article by Ambrose Evans Pritchard for the Telegraph - Europe is moving to a war economy f
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CREDIT: Simon Price

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