“UK energy prices increased by around 50% yesterday (3 February 2022) but the cost of producing most energy has not increased. Nuclear and renewables cost the same to produce, for example. So, the price increases deliver very large profits to some energy companies. Why is Sunak happy about that?
The problem is energy is priced at the cost of the most expensive unit sold. As a result, Russia can push up gas prices and create an economic crisis in the UK. If we had a nationalised energy system that supplied our energy at the average price we could avoid this.
Instead of our energy being priced at the cost of the most expensive source available we’d instead pay the price set by a basket of energy sources. We’d see nothing like the proposed cost increase as a result, and the crisis for families across the UK could have been avoided.
This, though, would require the government to admit three things. First, the energy market does not work so, second, energy privatisation was a mistake and, third, the state could and should do this job because it can do so better than any market system.
Our government is not going to admit that. So, instead energy companies are going to be allowed to profit, 5 million households are going to be in fuel poverty and a wholly inappropriate and unfocused support system is going to deliver a bizarre package of support.
In that case there is one conclusion to reach. Because the government prefers its pro-market dogma to helping deliver what’s best for the people of the UK we’re going to have a massive cost of living crisis from which profits will flow to a few, inevitably.
I believe in markets when they're the right mechanism to use. When they are they can work to benefit us all. But artificial markets for energy that deliver worst possible outcomes for people and best possible outcomes for companies are just wrong, and that is what we have.
The right response to our energy crisis is not to keep existing structures going. It is to accept that the energy market is failing and to bring the state licenced profiteering to an end and rebuild an energy system run in the interests of people and not profits.
The political party that says so is onto a winner. They should be taking note. The energy system we have cannot continue. Who will have the courage to say so?“-Richard Murphy
