First real hardship in the UK?

[snow hope]

Given that some folks are predicting gas shortages this winter, which may cause blackouts. Others (the Met Office) are forecasting that we may have a colder than average winter (which would feel harsh compared to the last decade of mild winters). And Matt Simmons is predicting we could have a shortfall of 2-5m barrels of oil / day worldwide this winter.

When do people think we might feel the first hardships in the UK as a result?

[mikepepler]

Poorer families are already feeling the effects of high fuel/gas/elec prices, as are businesses - look at the number of lay-offs reported so far this year, and think of the people who are now looking for jobs in a shrinking market.

But - fuel prices are not really high yet, are they? What happens when those shipments of petrol/diesel/crude to the US form reserves need replacing? What happens when the NG shortage in the US starts to bit at the same time as the one here. I think real hardship could become more widespread for those with less cash at almost any point as we head into the winter.

Once it gets cold, then we'll really see people start to hurt - if the electricity is off, it doesn't matter how much money you have, you still can't buy heating, unless you had the foresight to go and buy something in advance to keep you warm.

[fishertrop]

When do people think we might feel the first hardships in the UK as a result?

I agree with mike, the poorest - those with badly insulated homes and the least efficient heating systems - might be the ones to suffer.

My gut feeling (for what that's worth!) is that whilst we might see some disruption this winter it will be manageable for most people, esp those of us that have done some prep - I think what it will do is provide a lot of info for people as what things might be like in the future, like a dry-run, a test of your plans.

This is not to belittle the position tho of those poor people sat in barn-like freezing homes with a blanket wrapped round them in the depths of january

[newmac]

I can't really see how the met office can predict a cold winter. I can see how they can say we haven't had a cold winter for a statistically long time but nothing more than that. Surely long term weather (as opposed to climate) forecasts are impossible due to chaos? Therefore this winter has as much chance as any of being mild or cold.

Could someone explain to me how else other than statistically the met are saying this?

[Totally_Baffled]

I think I am right in saying that the gas shortages for this winter (if winter is cold) will only effect industrial customers?

People will have to pay through the nose , but they will have electricity and gas in their homes.

We are in trouble , but the fun doesnt really start for real on electricity/domestic gas until 2010/2012 +

Oil on the other hand could be sooner !

TB

[Blue Peter]

We are in trouble , but the fun doesnt really start for real on electricity/domestic gas until 2010/2012 +

TB

What are you basing that prediction on?


Peter.

[Totally_Baffled]

We are in trouble , but the fun doesnt really start for real on electricity/domestic gas until 2010/2012 +

TB

What are you basing that prediction on?


Peter.

There is a Norwegian gas pipeline starting supply in 2007 which can supply up to 20% of UK gas demand.

There is also Milford Haven LNG port that commences supply from 2008 which can supply upto 33% of UK gas demand (suppliers are Qatar, Malaysia, Algeria et al)

North Sea gas can supply upto 60% of UK consumption until 2010(estimated).

So if the UK has a capacity of 113% of demand in 2010. BUT, the NS is declining at 9% (but maybe accelerating by then?), so within 2 years we have another natural gas supply gap(circa 2012).

This assumes that the northern European pipeline from Russia doesn't get built. This could provide us with yet more time. I cannot find a figure of how much this could provide.

Of course all these dates could be out if NS declines start accelerating into high double figures !

http://www.oxfordenergy.org/pdfs/LargeS ... entGas.pdf

There is a nice little summary of planned gas projects for the UK in this PDF.

Now I can see why there is an urgency to make a decision on nuclear!

TB

[Blue Peter]

Now I can see why there is an urgency to make a decision on nuclear!

TB

That's the way which we'll try to go (business as usual), but it's just storing up problems for the future. Are there any realistic alternative strategies available (insulate, switch to renewables, change our lives, etc.)? What about in all these university energy departments? Mike?


Peter.

[snow hope]

fischertrop said,

"whilst we might see some disruption this winter it will be manageable for most people, esp those of us that have done some prep"

I think this is a lot less than 1% of the population, thus can I assume you think it won't be very manageable?

newmac said,

"I can't really see how the met office can predict a cold winter."

The forecast by the Met Office is said to be "experimental" and is based upon the North Atlantic Oscillation (NAO) history of the last 100 odd years. The confidence is 66%.

Totally_Baffled said,

"I think I am right in saying that the gas shortages for this winter (if winter is cold) will only effect industrial customers?"

Not sure you are right here. I have read that the shortages are likely to impact electricity generating stations, thus potentially causing blackouts as alluded to in my initial post.

[mikepepler]

I think you'll find there is definitely a risk of the power going off this winter, as electricity generation is one of the "industrial" customers the gas suppliers will be shutting off when they run low. This is being discussed on another thread: http://www.powerswitch.org.uk/forum/viewtopic.php?t=521

As to alternatives, maybe in development right now, I'm sure there are many, but none are ready on the scale required. The only realistic strategy I can see for the UK is that when it gets cold, everyone - and I mean everyone - starts wearing more clothes when they're indoors and turns the heating down. If everyone did it, the gas supply might be sufficient, but I can't see the goverment trying to get people to do it. You can't rely on pricing to do it, as consumer bills will not change fast enough in response to a sudden cold spell in the winter, and for most people the gas cost is still a low percentage of their income, so they'll just leave the heating turned up.

[Blue Peter]

As to alternatives, maybe in development right now, I'm sure there are many, but none are ready on the scale required. The only realistic strategy I can see for the UK is that when it gets cold, everyone - and I mean everyone - starts wearing more clothes when they're indoors and turns the heating down.

I meant the question more in response to totally_baffled's comment about nuclear than the specifics of gas this winter (sorry Damian ).

That is, due to the scale and intermittancy problems with renewables and just what we know works (nuclear) issues, then I think that we will go down the nuclear route. It's the only one which seems to able to deliver anything like a "business-as-usual" energy infrastructure, which is why we'll choose it (and also why ultimately it will fail IMHO). Any other strategy would presumably be based on renewables and so be a move to less energy use (and would include wearing more clothes in winter ). To do that would involve massive changes in the way we do things - much less heavy industry, organic farming, much more localisation, trains, canals, etc.. The question is whether anyone has even a vaguely plausible strategy for going down this route. You can't just say "Stick up loads of wind turbines," "Only organic farming," etc., you have to say how we'll get from here to there. So, I wondered if anyone (and university energy departments might be good candidates) had scenarios worked out, which could be presented as realistic alternatives.


Peter.

[fishertrop]

I think you'll find there is definitely a risk of the power going off this winter, as electricity generation is one of the "industrial" customers the gas suppliers will be shutting off when they run low. This is being discussed on another thread:

Yes, but it's industry that looses electricity first as well as gas first, so as long as the total power generated is the same as domestic demand then all the buinesses will get hit but the telly will stay on in everyones homes.

Lets do the rest of this over at http://www.powerswitch.org.uk/forum/viewtopic.php?t=521 as you say.

[fishertrop]

I think this is a lot less than 1% of the population, thus can I assume you think it won't be very manageable?

True, few people wil have done much prep, but I think domestic disrutpion for those that can afford the fuel bills will likely be small.

Of course, not being able to go to work in decemeber and jan because they've shut up shop thru lack of power is another kind of disruption altogether!

[zceb90]

There is a Norwegian gas pipeline starting supply in 2007 which can supply up to 20% of UK gas demand.

There is also Milford Haven LNG port that commences supply from 2008 which can supply upto 33% of UK gas demand (suppliers are Qatar, Malaysia, Algeria et al)

North Sea gas can supply upto 60% of UK consumption until 2010(estimated).

So if the UK has a capacity of 113% of demand in 2010. BUT, the NS is declining at 9% (but maybe accelerating by then?), so within 2 years we have another natural gas supply gap(circa 2012).

This assumes that the northern European pipeline from Russia doesn't get built. This could provide us with yet more time. I cannot find a figure of how much this could provide.

TB

Do you know what prices the contracts for imported gas from Ormen Lange and LNG into Milford Haven have been struck at? We used to have some really long term (and low priced) contracts for N Sea gas supplies but I'd assume we are having to move to world market rates for both Norwegian and LNG imports. If / when US gets their LNG infrastructure in place we'll face some hefty competition for supplies hence higher prices.

I'm strugging to figure out how UK is going to afford imports of both NG and oil on a massive scale as N Sea continues on the downslope; after all most of our manufacturing base and some services have moved offshore hence we don't appear to have that much sound overseas earnings with which to offset these increasing import costs for energy.

[Totally_Baffled]

Do you know what prices the contracts for imported gas from Ormen Lange and LNG into Milford Haven have been struck at? We used to have some really long term (and low priced) contracts for N Sea gas supplies but I'd assume we are having to move to world market rates for both Norwegian and LNG imports. If / when US gets their LNG infrastructure in place we'll face some hefty competition for supplies hence higher prices.

I dont know unfortunately, I will try and find out!

I suspect you are correct in that we will have to pay market prices. I think the LNG is under a 25 year contract , so I presume although we pay the market rate, it cannot be hijacked by the US.

http://www.hydrocarbons-technology.com/ ... laffanref/

From the link

A fleet of 16 to 18 LNG carriers will be constructed to support shipping of the lean LNG to the dedicated UK terminal

A fleet of 16 to 18 LNG carriers will be constructed to support shipping of the lean LNG to the dedicated UK terminal. The orders for new LNG tankers were placed in mid-November 2004.

Three South Korean shipyards were commissioned to build eight state-of-the-art tankers that will be 50% larger than conventional LNG ships. Daewoo Shipbuilding and Marine Engineering will produce four 210,000m? tankers at a cost of around $875 million, while Hyundai Heavy Industries and Samsung Heavy Industries took orders estimated at $450 million to build two vessels each.

The remaining eight LNG transport ships will be provided under a series of 25-year time charters with two consortiums, ProNav-Commerzbank-Qatar Gas Transport Company and Overseas Shipholding Group-Anglo Eastern-Qatar Gas Transport Company. These state-of-the-art vessels will range in size from 209,000m? to 216,000m? and will be on average 50% larger than conventional LNG ships, thus making transportation more economical.

As for this:

I'm strugging to figure out how UK is going to afford imports of both NG and oil on a massive scale as N Sea continues on the downslope; after all most of our manufacturing base and some services have moved offshore hence we don't appear to have that much sound overseas earnings with which to offset these increasing import costs for energy.

I think to get in perspective, France , Spain ,Italy , Germany etc all use more oil than the UK and import the whole lot!! Its a similiar story for natural gas , we are a bigger consumer , but we will not be importing the same proportions as these countries for another 15 years ( 75%+)

I think there are still implications though. The trade deficit would double if we had to import 100% right now.

The implication of this would be higher interest rates to prevent the pound from collapsing. Unfortunately , higher interest rates will without a doubt cause a big recession as we are already on the edge of one at 4.5%.

If rates go 6-8%+, then you will see the housing market crash and millions with negative equity.

Unemployment would rise as consumer spending was squeezed by inflation (from energy prices) and interest rate rises.

So a recession is inevitable.

Its not all bad though, there are some self correcting mechanisms at work, these could in theory prevent total economic collapse:

1) A higher trade deficit would weaken the pound. Imports would become more expensive and so demand would fall. A weaker pound also makes UK good cheaper to foreign buyers, so this could correct the deficit.

2) Higher energy Prices passed onto factory gate prices could be offset by a weaker pound. It also could be argued that all nations have to pay the higher prices so the net competitive difference is negated.

3) Housing market correction would reduce reduce new builds and leave a lot of property empty. There is your imported energy "demand destruction". This would help correct the deficit, but people would pay the price through having to live in with family (ie occupancy rates would increase again per household, ie from 2 to 3 like it used to be)

4) Higher Energy prices will make imports from the far east less competitve as they have the extra cost of moving the goods 8000 miles.

5) A recession in the western world (we will all face it at the same time IMO) would reduce drastically the demand for Chinese/Asian goods. This would reduce there demand for energy. This would restrict how high prices could go.

6) Higher Unemployment causes demand destruction of imported goods first (as key priority goods like food etc are produced at home). This again will correct the deficit.

7) Higher unemployment should self correct as wages would fall(as people become more competitive for jobs). This would improve the UK's export prices.

None of the above is very pleasant, but it is just examples of how perhaps that even though standards of living will slip the economy will still exist and we wont have a total collapse.

Remember the early 80's recession caused energy demand to fall 14% over 4 years and unemployment/trade deficits corrected over time.

We dont have cheap oil to help us this time, that is perhaps why the sacrifice will be wages and our standard of living?

TB