Sky News economics and data editor Ed Conway lays out the energy crisis expected this winter.
The looming energy crisis has been blamed on many factors, from Russian supply chains to Brexit – so economics expert Ed Conway on Tuesday created a digestible Twitter thread to explain it.
Acknowledging the growing uproar about rising gas prices and dwindling food supplies, Conway – Sky News’s economics and data editor – warned that the public should be “beware of tempting catch-all explanations”.
So what factors are really responsible for the downfall of suppliers like Green?
1. It’s Not All To Do With Russia
Conway acknowledged that some are blaming Russia for slowing the gas flow being sent to Europe in the pipe, following the controversy over a nearly completed pipeline called Nord Stream 2 across the Baltic Sea.
However, he added that Russian flows have actually increased compared to the beginning of the year, even if they remain below pre-pandemic levels, meaning that low Russian supplies are not the only reason for the current crisis.
This supply from Russia also accounts for less than 5% of UK gas.
2. What happened to our natural gas suppliers?
Domestic gas fields have slowed down their lines of production, and LNG – liquefied natural gas – tank deliveries have been reduced.
The supply of imported gas from regions such as Qatar has dwindled as demand has increased around the world.
The UK has less gas storage than its European neighbours, which means that if it is vulnerable to shortages, this ‘just-in-time’ model struggles to meet demand.
Conway tweeted: “We are not getting LNG tanker deliveries as usual and domestic gas fields are not producing as usual.
“These seem like a big deal out of Russian supplies.”
3. Brexit Isn’t Really Contained
Conway continued: “Another claim is being made on Twitter that the UK is uniquely affected by this crisis and it is all down to Brexit.”
After Brexit, the UK left the EU’s internal energy market.
But, as Conway put it: “UK prices for the period last week were actually higher than most of Europe. But it was not because of Brexit. It was because of the fire at the interconnector.”
He is referring to a massive fire at a power unit in Kent. The fire meant that power coming from France was cut off – and National Grid does not expect the unit to partially recover until October.
When pressed by another Twitter account, Conway tweeted: “Brexit could certainly affect energy in the years to come. But trying to stop the recent price surge seems shocking. Through what mechanism is Brexit?” Who is responsible?”
4. UK energy prices currently higher than EU countries
Conway tweeted: “UK energy prices are much higher than most EU countries. Gas and electricity prices are rising everywhere but levels are highest in the UK.
Jonathan Brearley, CEO of energy regulator Offgame, told The Sun: “If you look at gas prices – that’s something we don’t think we’ve seen before at this pace.”
He said millions of people in the UK were expected to be affected as energy suppliers could collapse in the coming weeks.
Conway also pointed out that since the UK has ceased to rely so heavily on coal in recent years, imports for electricity generation have generally slowed down.
Wind power also plays an important role in meeting energy demands, but in recent months this source has been shut down due to weather, meaning that wind turbines are not as powerful.
While other European countries may also suffer from these problems, the UK does not have the same backup energy supply as its neighbours.
France gets most of its energy from its own nuclear power stations, while Norway and Sweden produce a lot of hydroelectric power, and Portugal uses energy from water or wind.
Despite the environmental consequences, both Germany and Poland still depend on burning coal.
5. UK energy policy remains unclear
As Conway tweeted: “Expecting a change in the weather does not constitute an energy police. And it is still unclear what UK policy is…”
Still, Downing Street is fighting the alarm about the energy supply.
Prime Minister Boris Johnson told Sky News: “The market is going to start to fix this, but in the meantime the government is going to help people, to help fix it, to make sure we get things right.” Smooth it out, we’ll do everything.”
Energy Secretary Quasi Quarteng has also claimed: “There is no question of the lights going off, people are unable to heat their homes.
“There would be no three-day work week or back in the 1970s.”
The government claims it also has a “diverse and safe” range of suppliers.