Sometimes cleverness can’t get you out of a hole

Kwasi Kwarteng – Britain’s top business minister – is smart. 

King’s Scholar at Eton; Double first from Cambridge; University Challenge winner; Kennedy Scholarship and a PhD in Economic History – from Cambridge.  With prizes along the way.

Whew!

Isn’t it good, Norwegian soot

Just keep reminding yourself that things need to get worse before they get better.

Norway – a grand profiteer from blood carbon, according to the puritanical wing of the climate church – has come up with a very old and very bad answer to Europe’s energy price crisis.

According to the Times, the government is going to help pay Norwegians’ electricity bills:

“Each household is expected to save hundreds of pounds through state subsidies to cover half of power costs above a price floor over the coming months.”

Energy markets: the more they change, the more they stay the same

Insanity is doing the same thing over and over and expecting different results.

Which, with baroque variations, is the story from the UK domestic energy market.

As we’ve reported before, the market is suffering from the unfortunate conjunction of soaring input prices and a populist price cap.  As suppliers collapse into the consumer-funded government safety net, the regulator is thrashing around trying to cobble together a fix which might avoid prices rising to their true level too fast, without offending voters or damaging long-term supply.

And trouble in the East as well …

Tyrants prefer to move when their enemies are weak, divided or both.  So no surprise to see Russia’s Vladimir Putin fresh from his triumph in coercing Moldova, to stirring up trouble in the Balkans, supporting Belarus’s migrant-based diplomacy, blackmailing the EU over energy supplies this winter, and ratcheting up the threat of military action against Ukraine.

Well, that’s the view from the London-based Daily Telegraph, which points out that Putin has been sending clear and consistent messages, (punctuated by use of force in Georgia, Crimea and Eastern Ukraine):

It will be a good day when Judith Curry is better known than Greta Thunberg

The world climate revival meeting in Glasgow ended with Alok Sharma (the UK’s minister to COP26, as well as the presiding chief priest) in tears over a last minute word change.  The countries which have built more coal fired capacity, more quickly, than just about anyone else in history (that’s you China and India) would only agree to phase its use “down”, rather than “out”.

Despite the (quite literal) imprecations of hellfire, the only truly substantive outcome of the conference may be the Chinese government’s practical suggestion that the world should aim for a global temperature increase of 2°.  (Bill Gates also chipped in some climate realism, noting that 1.5° was probably unachievable.)

Boris: right idea, wrong execution

A week ago we wrote about the British PM’s move to check an out-of-control Parliamentary watchdog.  It ended in a populist revolt and he sacrificed a former minister, Owen Paterson, to the mob.

This seems to have worked as well for him as it did for Charles II.  One of his Tory predecessors, Sir John Major, broke the first rule of party loyalty by branding the government “politically corrupt”.  And the opposition started baying for the head of former attorney general Sir Geoffrey Cox because, as a backbench MP, he had also worked as a barrister and had committed such heinous offences as missing the deadline to register his earnings.  

Government ‘in control’. For how long?

The first year of Covid rattled confidence in governments round the globe. The 2021 energy price surge is exposing a swathe of vainglory and folly in policymaking.

Yet looking back over the last fifteen years or so, it seems remarkable how ‘hands on’ government has confounded its critics.  Global financial panic, Eurozone debt crisis, Brexit ructions, Covid pandemic – in each case the gloomsters were largely confounded.  

Worst case scenarios did not materialise. A handful of decisive policy steps and a great deal of ad hoc tinkering have seen living standards, jobs and house prices protected.

Economist is always right

The best editorials in The Economist are timeless. Traditionally they germinate in a Monday morning editorial conference run on the lines of an Oxbridge tutorial; Tuesday for a sometimes leisurely write up; Wednesday for editing; last minute tweaks on Thursday; giving a quality product with a life span longer than yesterday’s fish.

The latest on the global energy shock fits the bill.  Structured on the classical editorial tripos of “ … three problems loom[ing] large”.  Magisterial, incisive, combining sound economics with a global sweep of history.

But perhaps ten years too late.

Big boost for NZ’s gas supply – and a setback for the climate-change warriors

Here’s   a  bit of good  news  on the  energy  front to  mitigate some  of the  gloom  created by soaring costs, potential  black-outs and rising  carbon emissions.

Genesis  Energy  reported this week  New Zealand’s gas supply has been boosted  after a $72m project at the Kupe gas production station near New Plymouth has been  finished.

The inlet compression project, undertaken by Genesis and its Kupe Joint Venture partners, operator Beach Energy and NZ Oil & Gas, increases production back to the plant’s full capacity of 77TJs a day, the equivalent of supplying around 15% of NZ’s natural gas demand.

Genesis’ group manager Kupe JV Craig Brown said despite some Covid-19 supply chain delays, the project was delivered within budget and with no lost-time injuries from 170,000 person-hours on site – a testament to the strong safety focus of the team on the ground.

Emergency measures introduced in UK as energy bills soar – and NZ should brace for rising prices, too, thanks to exploration ban

Soaring energy  bills are a  problem for  firms,  households,  and  the  government. This  was  a  headline  in  The Economist last week – but it  can’t  happen here, can it?

After  all,  NZ has   plenty    of energy.  Unlike Europe, 80%  of  its electricity is  from renewable  sources. And  according  to oil industry  authorities, NZ is  surrounded  by a massive  continental  shelf — the fifth  largest in the  world, beneath  which  lie  vast  quantities  of  undiscovered  natural gas and, probably, some light oil.

So  surely  NZ  can face  the  future  with confidence?

Well,  no:  let’s not forget Prime Minister  Jacinda  Ardern had her “non-nuclear” moment and  placed a ban on new offshore exploration permits  for  oil  and  gas.  Since  then,  as  international oil explorers gave  up  their  offshore   exploration  licences, supplies  from existing  producing  wells have begun to  diminish for several reasons.

Higher  costs  are  starting  to  flow  into  household and  business  gas  bills. Vector  is  increasing  Ongas LPG  cylinders  from  $115.026  to  $125.82.