Cutting energy consumption is bringing wholesale gas prices down - Andy Brown

That raises some rather important questions. Such as why are household bills so high if the price has dropped by so much?

Ask a supplier of gas and they will tell you that they try and even out the changes in wholesale prices and provide the customer with changes of price that they are confident they can sustain and that are entirely reasonable. Consumers are entitled to wonder whether the prices were quick to go up but are proving very slow to go down.

Sooner or later the low wholesale prices should translate into considerably lower prices for consumers which will be a bit of very welcome news for all of us. How much sooner and how much later is of critical importance. If companies are allowed to sit comfortably on high prices and high profits then it will take a long time for the rest of us to feel any benefit.

Throughout this crisis the UK has faced some of the highest energy prices in Europe. Whilst people were worrying themselves sick over how to stay warm some of the major producers recorded record profits. Shell made around £30bn in part of 2022 yet avoided paying a single penny of windfall tax in Britain. That doesn’t inspire confidence.

What ought to inspire us is the reason why the market price has dropped so quickly. What has happened is that across Europe there has been an effective campaign to cut consumption and that has cut prices.

Between August and November 2022 gas consumption across the whole of the EU was down by 20.1 per cent compared to the same months for the same period in the previous five years. A period of time that included the Covid slow down.

Most of the supply of gas is a fixed quantity that can’t easily be increased or reduced. President Putin assumed that if he cut off a big chunk of that supply he could force up prices for long enough to bring Europe to its knees and persuade it to sell Ukraine down the river in return for cheaper bills.

Instead of giving in to his bullying public buildings across the EU have had their heating turned down, consumers are being encouraged to avoid use at peak times and a major drive to cut consumption has taken a significant chunk of demand out of the system and lowered prices. The French have even taken to fitting solar panels above every public parking space.

The cheapest energy is always the energy you don’t use and cutting consumption from the grid comes with the rather important added benefit of cutting down on carbon dioxide emissions and reducing the key driver of our increasingly chaotic weather. That is why environmentalists have always been keen on better insulation, and home generation and storage.

It now turns out that cutting consumption also has a big impact on price because it tips the balance of supply and demand. In a market where supply is relatively static any reduction in demand by one set of consumers helps provide cheaper prices for all the others.

On every level cutting consumption of energy from the grid brings benefits. It cuts home energy bills. It reduces business costs. It brings down the running costs of schools, hospitals and care homes. It cuts imports. And It helps the planet.

Yet there has been one government in Europe that has been noticeably absent from this major drive to reduce consumption. The British government.

Whilst almost every country in the EU has instructed public buildings to reduce the thermostat there has been no equivalent campaign in Britain. The support available from the British government to improve home or business insulation or to use school roofs to generate power has been weak or non-existent. Indeed, we are still building new housing estates that don’t have a single solar panel on the roof.

If we are serious about beating President Putin we need to do more to reduce our energy consumption. If we really want to tackle inflation then we need to start acting seriously on the single most effective way of bringing down energy bills. If we are to have any hope of limiting the cumulative damage of climate change we need to cut carbon use.

The good news in all this is that sooner or later a relatively limited set of actions on over cutting energy use in Europe is going to result in everyone in Britain paying lower prices for our energy. How much more could be achieved if there was a sustained drive to permanently cut use that the British government properly participated in?

Andy Brown is a Craven District Councillor representing Aire Valley with Lothersdale and the Green Party North Yorkshire Councillor for Aire Valley.