Winter comes to Mr Blair’s la-la land and we’re likely to be shivering for some time

Out of gas is an American expression seldom heard on this side of the Atlantic, where cars run on petrol not gasoline. But could Britain nevertheless run out of gas this winter?

Over the past eight years, Tony Blair and his colleagues have emitted a great deal of environmentally-friendly hot air on the subject of energy. But this winter they are at long last getting their come-uppance in the form of CH4, methane, the principal constituent of natural gas.

First, a word of reassurance. As everyone knows, we British love to talk about the weather. By contrast, we find economics boring, and science more so - to the extent that almost no one can be found to teach physics in our schools these days. Happily, this is a story in which the weather plays a key role.

It all began with the prediction that this might be a colder-than-average winter. Now, do not ask me why anyone believed this. Weather forecasts beyond a 24-hour time horizon are subject to very high margins of error. Never mind. It was enough to get them singing White Christmas in the City of London and before you could say "Bing Crosby" the price of natural gas leapt from 30 pence a therm to above 150 pence a therm.

This is what free markets often do: overshoot. Expectations suddenly change on the basis of a new piece of market-sensitive information, whereupon the traders of the Square Mile hurtle off like a pack of wolves scenting a well-fed moose.

The problem for the British Government is simply that expensive gas was not something it bargained for when it formulated its energy policy back in 1997. This was to be an impeccably green policy. By 2010, Britain was to reduce its greenhouse-gas emissions (principally CO2) to just 80 per cent of their 1990 levels - nearly double the cut required by the Kyoto treaty. Even today, Mr Blair still likes to pose as the greenest of world leaders, the man with a mission to salvage something from the wreck of Kyoto.

For a while this was almost convincing. The liberalised energy market he inherited from the Conservatives did his job for him as electricity generators shifted from coal to gas, attracted not so much by the lower carbon and particle emissions of burning gas, but by its wonderful cheapness. Back in 1987, gas accounted for just over 1 per cent of the fuel used to generate electricity in the United Kingdom. Today it accounts for 34 per cent. Recent forecasts suggested its share could rise to 60 per cent by 2020.

What ministers had overlooked was that, yes, prices can go up as well as down. Britain's own supplies of North Sea gas are fast running out, at the very time when global energy consumption is soaring, largely as a result of the dramatic increase in economic growth of the world's most populous countries, India and China.

Most people are aware of this because of the recent surge in oil prices. But it applies to natural gas, too. China's total energy demand is forecast to grow at 3.2 per cent a year over the next 20 years, but its demand for natural gas is expected to rise at 12 per cent a year. Beijing may be a long way from Birmingham, but both are potential customers for the Russian gas behemoth, Gazprom.

This, in short, is about more than a cold snap. As the most densely populated parts of Asia start to catch up economically with the equally densely populated north-west of Europe, there is going to be a real energy squeeze. Indeed, it is already upon us. This squeeze has profound implications.

We know from the 1970s that sudden surges in energy prices can seriously hurt industrial economies. No one should pretend that this could not happen again, as American and European consumers respond to rising fuel and heating bills by tightening their belts - or as British factories are forced to halt production because their gas supply is interrupted.

It has geopolitical implications, too. High prices transfer income from energy importers to energy exporters. We should be much more worried than we are that the principal beneficiaries of the current oil and gas bonanza are such countries as Russia, Venezuela, Iran and Saudi Arabia. These are not the countries either Tony Blair or George Bush would have picked to be the recipients of a multi-billion dollar windfall.

The implications for a loser country such as Britain - which will increasingly be an energy importer in our lifetimes - are sobering indeed. Until this year the Government has been living in la-la land, imagining that within five years a tenth of Britain's electricity requirements could come from "renewable" sources like wind power. This is pure fantasy. Wind farms simply cannot deliver enough energy, not least because the wind doesn't blow every day.

To meet its target, the Government would have to turn the whole of Wales, and probably Scotland, too, into a wind farm. In any case, wind farms require a huge subsidy to be worth building - perhaps as much as o1 billion a year by 2010, plus another o1.5 billion to get the more distant turbines linked to the national grid.

Britain's lamentable energy policy is nicely summed up by the contrasting views from our house in South Wales. Out to sea there is the green and lovely Devon coast and the great, grey Atlantic. This magnificent vista is about to be blighted by the construction of a vast forest of wind turbines just a few miles offshore. The amount of energy these things will generate is debatable, but even assuming it is enough to illuminate Swansea, as the developers boldly claim, they will not suffice to save even this small part of the planet from global warming.

Because right next door to Swansea - and equally visible to us - is the huge Port Talbot steelworks, whose daily consumption of fossil fuels I would hesitate to estimate. And just a few miles to the north is the M4 motorway, along which innumerable cars and trucks incessantly roar, burning up prodigious quantities of petroleum (remember, transport accounts for a quarter of UK greenhouse gas emissions).

The Government has in fact belatedly realised that wind is not the answer - hence recent heavy hints about the need to build a new generation of nuclear power stations. But it's already too late adequately to compensate for the imminent closure of the last generation of nukes.

The nuclear sector's share of total electricity generation will have fallen from 21 per cent, its current level, to just 7 per cent in 15 years time. It could take nearly that long to get any new reactors built, given the levels of business suspicion (they're expensive) and public opposition (not least within the Labour Party itself). Hmm. That just leaves coal and oil - both of which mean, er, increased CO2 emissions.

But never fear. Even as the lights and radiators go off all over Britain - which, ironically, The Sun thought would happen if an earlier Labour leader became Prime Minister - we will at least be able to console ourselves with the illusion of warmth. For, presciently anticipating the coming energy crisis, the Government last week allowed pubs, clubs and shops to sell alcohol 24 hours a day.

Of course, alcohol doesn't really warm you up - rather the reverse. But it feels as if it does, and for most people that's just as good. The other helpful thing about excessive alcohol consumption is that you can't drive, so getting everyone permanently plastered should cut down on greenhouse gases too.

So we may run out of CH4. We may fail to curb emissions of CO2. But as long as we have adequate supplies of C2H5OH - that's alcohol - we British can still have a Merry Christmas, no matter how white it gets. Cheers Tony! Not many people know how to turn natural gas into intoxicating liquid, just by adding hot air.

finance economics
Daily Telegraph
  • Show All
  • New York Times
  • Wall Street Journal
  • Daily Telegraph
  • Financial Times
  • Newsweek/Daily Beast
  • The Washington Post
  • The Australian
  • Daily Mail
  • Huffington Post
  • Vanity Fair
  • The Telegraph
  • Time Magazine
  • Foreign Affairs
  • The Sunday Times
  • London Evening Standard
  • The Spectator
  • The Atlantic
  • The Globe and Mail
  • Politico Magazine
  • The Times Literary Supplement
100 Article Results

Trump exemplifies the Ugly American. Davos will accept him anyway.


Why E.U. collapse is more likely than the fall of the euro


End of the Euro


Slow but sure


Time travellers