Are we REALLY heading for very bad times in late 2022/early 2023?

[kenneal - lagger]

Economist have been telling us for years that physical shortages are impossible because the market will always provide because the price goes up to cover the extra cost of producing more. The price must be alright now because it is so high so there can't be any physical shortages. Can there??? The fact that no one can afford to buy the stuff has got nothing to do with anything.

[adam2]

In a free market economy, prolonged physical shortages of fuel or other supplies are most unlikely.
Any reduction in supply tends to increase the price, until the higher price reduces demand to match the lower supply. This is happening right now.

Short term shortages of fuel or other goods can occur at any time. due to exceptional demand, industrial disputes, mechanical breakdowns, extreme weather or other factors. I would urge keeping a reserve of those fuels and supplies that can be stored, for use in short term emergencies, consider for example the petrol blockades of some years ago, or the great toilet roll panic, or the present propane shortage.

But in the longer term, in a free market economy prices increase until enough demand is destroyed to match to reduced supply.

As people have grown used to cheap and plentiful fuel, these much higher prices will result in real hardship and possibly violent protests.

A future UK government might decide to hold down retail gas and electricity prices, if long continued that would result in physical shortages since demand is stimulated but wholesale supplies remain restricted and expensive.

[PS_RalphW]

The problem with fossil fuels, oil and in particular gas, is that both supply and demand are very inflexible in the short term, and the world has limited storage, which for gas is very regional. However, the growth of global energy consumption has grown in lock step with global gdp since records began. Over the recent decades the ratio of gdp growth to energy growth has increased, but the link is inescapable. If energy supplies declines regionally or globally, then the price will increase to the point that demand is cut by reducing gdp, until demand is back in balance. Supply is much less flexible, and given that we are close to peak increases are going to be very slow. Gas is worse, and Russia has huge control over the European market, as they can more than double the market price by halving their supply to us, at least until we go into deep recession. Putin is making more money and saving half of his finite gas reserves. He knows the rest of the world will not be able to make up the difference in less than a decade, if at all.

For practical purposes we are past peak energy in Europe, until we can build out renewable sources on a massive scale.

Globally oil is slowly coming back into balance, with the price falling below 100 dollars. We may see extended oil burning in gas power stations this winter.

[mr brightside]

I think i'm going to stop watching the news before i become permanently worried sick. Inflation at 10.1% and predicted to peak early 2023, evermore increases in gas price projections, small businesses closing up shop. I find myself getting seriously concerned for people who either can't prepare or don't have a prepare mentality and expect the government to do something. And like the covid situation, there is a distinct lack of blitz spirit.

[adam2]

I think i'm going to stop watching the news before i become permanently worried sick. Inflation at 10.1% and predicted to peak early 2023, evermore increases in gas price projections, small businesses closing up shop. I find myself getting seriously concerned for people who either can't prepare or don't have a prepare mentality and expect the government to do something. And like the covid situation, there is a distinct lack of blitz spirit.

Whilst I can understand your view, it is in my opinion best to remain informed of the news, no matter how bad it may be.

Most members of these forums are hopefully at least somewhat prepared for the increased fuel prices and possible shortages. I share your concerns regarding the unprepared.

[UndercoverElephant]

I think i'm going to stop watching the news before i become permanently worried sick. Inflation at 10.1% and predicted to peak early 2023

I see no reason to believe any of these official predictions. They have been consistently underestimating the scale of the problem for over a year now. Their models are broken, and they don't know how to fix them.

[kenneal - lagger]

The trouble is that the Bank of England will keep putting up the interest rate as it is the only thing that they can do to control inflation but that itself will put up inflation so their prediction is more likely to be right than wrong!

I agree about keeping informed, Adam. We have to anticipate any upcoming problems. My problem is my shoppers won't stockpile in advance because it might cause panic buying!!

[adam2]

A recent forecast suggests that annual energy bills for the average user could reach £6,000, next year based on current wholesale natural gas prices.

And with winter approaching, wholesale prices might well go yet higher. If things do get that bad, then I suspect that electricity will become completely unaffordable for a significant minority.
Strict economy only helps to an extent as the standing charge is about £200 a year.

It is of course possible to live without electricity, but life would be a bit primitive. Alternatives include.
Space heating, manage without unless below 10 degrees in which case LPG or paraffin.
Water heating, heat in a pot on an oil or LPG stove.
Lighting, candles, torches.
Laundry, do some by hand, weekly trip to coin op laundry.
Cooking, take aways, cold food, oil or LPG stove.
Entertainment, Reading, battery radio NOT DIGITAL.
Communications, cellphone charged by hand crank.
Refrigeration, none, shop daily for perishables.

If anyone in the household drives, then a deep cycle battery charged from the vehicle could provide very limited power.

I refer here not to the well planned off grid home, but to the minimum wage household who can no longer afford electricity.

I expect significant abstraction of electricity, and some fires and electrocutions therefrom.
I also expect significant thefts of PV modules and batteries, and a lot of crude and improvised small PV systems, and some accidents.

[adam2]

I find this report rather concerning.
https://www.bbc.co.uk/news/uk-england-n ... e-62636026

A large gang or mob of feral children stormed a fast food outlet and made of with food. I very much doubt that they were actually hungry or in serious need. Looks to me like general lawlessness and stealing being better than paying.
No arrests have been made. In the unlikely event that anyone IS arrested and charged, a good solicitor will no doubt argue that it was all due to the cost of living crisis.

Once people start to suffer from ACTUAL hunger, then I expect this sort of thing to become more popular. Fast food outlets will have to be made thief proof. Some of the marginal units may close down.

[Vortex2]

A large gang or mob of feral children stormed a fast food outlet and made of with food.

I saw this at a city centre off-licence in Coventry in about 1982.
The huge gang scared 100s of shoopers to hide in stores, who then locked their doors.
Very scary and totally unreported.

[cubes]

https://archive.ph/TZME3

An interesting and easy to read FT article "Some bleak truths for Britain"

[Tarrel]

There is going to have to be a huge adjustment in expectations among the population at large. I was listening to an article yesterday that suggested that, in the period after privatisation, energy costs formed only 3% of the average take-home income in Britain. This is the sort of aberration we have become used to. Can you imagine the percentage of waking hours that a hunter-gatherer would have spent in our type of climate gathering fuel for cooking and warmth? Ditto for food. (Shelter, on the other hand, would have taken relatively little of our available labour on a day-to-day basis, compared to today, when it takes the lion's share.)

[mikepepler]

I think i'm going to stop watching the news before i become permanently worried sick. Inflation at 10.1% and predicted to peak early 2023, evermore increases in gas price projections, small businesses closing up shop. I find myself getting seriously concerned for people who either can't prepare or don't have a prepare mentality and expect the government to do something. And like the covid situation, there is a distinct lack of blitz spirit.

Whilst I can understand your view, it is in my opinion best to remain informed of the news, no matter how bad it may be.

My approach has been to cut back on news, rather than stop entirely. I'm trying to limit myself to checking the news for about half an hour of listening/reading once per day. I don't think there's anything so urgent that this would make any difference, and if there was I'd hear about it through other routes anyway.

[RenewableCandy]

T(Shelter, on the other hand, would have taken relatively little of our available labour on a day-to-day basis, compared to today, when it takes the lion's share.)

Nail on head.
If we weren't paying literally a third (that appears to be about the average) of our income on rent/mortgage then everything else, even at current prices, would be something nearly everyone could deal with.

[clv101]

Peston: "The pound fell as low as $1.14 today, a low price not seen for any great period since the 1980s. Quite apart from this unfortunate symbolism for a new PM, it presents a problem for Liz Truss - because it will mean further rises in the sterling price of imports, and yet more inflation".