Skip to content

Is Chris Huhne Telling The Truth About The Real Cost Of Green Subsidies?

There are some questions to be answered about Chris Huhne’s explanation that ever rising prices for gas and electricity are mainly caused by fossil fuel costs, with only a tiny fraction of the increases supporting the massive susbidies taxes on everyone’s energy bills.

Wholesale energy prices peaked in 2008, and then fell back at the end of 2009, retail energy prices however after a slight fall stayed well above the 2008 peak, there were modest increases in wholesale price, last year and this year, but wholesale prices today, are well below the 2008 peak.

Fossil fuel prices have fallen, yet Huhne maintains that ever rising fossil fuel prices are the cause of all time high energy bills:

But retail prices have risen again and are now above their 2008 peak. Despite lower wholesale prices compared with three years ago our fuel bills are higher than three years ago.

So, contrary to the Energy Secretary’s position, higher fossil fuel prices cannot explain our current very high energy bills. And, contrary to the energy companies, they are not merely passing on the extra wholesale costs of energy.

Two further thoughts. It is clear that the energy market is not functioning like a proper competitive market, otherwise retail prices would not just go up in line with wholesale prices but come down too.

And maybe the Huhne green agenda, involving huge subsidies to wind generation, which end up on all our fuel bills, is much larger than we’ve been told.

Huhne is also wrong to assume that fossil fuel prices will always continue to rise, the shale gas revolution in the US is proof of that, where gas prices have fallen on average 15%.

Tory Aarrdvark, 20 October 2011