Rising energy costs

[WaveJumper]

The rise in cost has never been so unsustainable. As I mentioned in my previous posts, a lot of friends have multiple small retail units. Their bills are Normally under £1k per month. These rises will push that to almost £1k per week. Into the red. How will small businesses survive?

A larger company can borrow or leverage but that isn't an option for local small community businesses.

last week I was talking to someone on a business park where his power costs far out weigh the monthly rent, the figures were just eye watering. Surely by the end of this summer we are going to see a lot of people (business) just giving up as the costs just cannot be passed onto the customer.

Just how many business closures do we think it will take before the government are forced into taking some meaningful action.

 

[Newchodge]

last week I was talking to someone on a business park where his power costs far out weigh the monthly rent, the figures were just eye watering. Surely by the end of this summer we are going to see a lot of people (business) just giving up as the costs just cannot be passed onto the customer.

Just how many business closures do we think it will take before the government are forced into taking some meaningful action.

F**k business as our soon to be ex PM once said. I honestly don't think they will care until the unemployment figures are affected by a large amount.

EDIT: Just to add, this is terrible for the small businesses affected and their employees. Have you thought about what is going to happen to care homes, where a reasonable indoor temperature, 24 hours/day is required?

 

[UKSBD]

last week I was talking to someone on a business park where his power costs far out weigh the monthly rent, the figures were just eye watering. Surely by the end of this summer we are going to see a lot of people (business) just giving up as the costs just cannot be passed onto the customer.

Just how many business closures do we think it will take before the government are forced into taking some meaningful action.

It will probably lead to more small businesses giving up offices and working from home.

How long before energy companies target work from home businesses and stipulate that they have to have business contracts rather than domestic?

 

[WaveJumper]

F**k business as our soon to be ex PM once said. I honestly don't think they will care until the unemployment figures are affected by a large amount.

EDIT: Just to add, this is terrible for the small businesses affected and their employees. Have you thought about what is going to happen to care homes, where a reasonable indoor temperature, 24 hours/day is required?

I feel we are just sleep walking into the abyss. And I suppose more importantly why have we let our politicians get us into this situation in the first place, energy, water, steel even food production the list I am sure could go on on. They have (successive governments) done nothing to ensure the safety of supply or our reliance on others. God help us if we had to go to war where would we get the steel from to build anything, China?

 

[Newchodge]

I feel we are just sleep walking into the abyss. And I suppose more importantly why have we let our politicians get us into this situation in the first place, energy, water, steel even food production the list I am sure could go on on. They have (successive governments) done nothing to ensure the safety of supply or our reliance on others. God help us if we had to go to war where would we get the steel from to build anything, China?

I think it stared with Thatcher and neoliberalism. When everything is a commodity that can be bought and sold, and profit is king, there will be an eventual reckoning. Privatisation of the water gas and electricity supply, without tough regulation has been a major contributor to this problem.

 

[IanSuth]

It will probably lead to more small businesses giving up offices and working from home.

How long before energy companies target work from home businesses and stipulate that they have to have business contracts rather than domestic?

Not sure that would work, they would need 2 separate meters at least as the business electric would be VAT deductible as a business expense but the home supply would have to be separately accountable.

How does an electric company decide whether when I am sat at home which Joules of electric being used in the house are my personal use, my company use or my wife's company use (different company)

Who is going to pay for that extra infrastructure ?

 

[IanSuth]

I think it stared with Thatcher and neoliberalism. When everything is a commodity that can be bought and sold, and profit is king, there will be an eventual reckoning. Privatisation of the water gas and electricity supply, without tough regulation has been a major contributor to this problem.

Well neither Rishi or Liz are going to reverse that so we have what we have for the duration of the current crisis as it would take something unimaginable to cause an early GE

 

[Newchodge]

Well neither Rishi or Liz are going to reverse that so we have what we have for the duration of the current crisis as it would take something unimaginable to cause an early GE

I agree, even when Truss' policies are quickly proved to be suicidal, the Tories are not going to want eithera new leadership contest ?or a general election they would be very likely to lose.

 

[UKSBD]

Not sure that would work, they would need 2 separate meters at least as the business electric would be VAT deductible as a business expense but the home supply would have to be separately accountable.

How does an electric company decide whether when I am sat at home which Joules of electric being used in the house are my personal use, my company use or my wife's company use (different company)

Who is going to pay for that extra infrastructure ?

They may come out with something like, you are using energy for business purposes therefore the Cap doesn't apply to you.

Hopefully unlikely but with such a big difference between the cap and what they can charge businesses, who knows what they can try and do

 

[NickGrogan]

I think it stared with Thatcher and neoliberalism. When everything is a commodity that can be bought and sold, and profit is king, there will be an eventual reckoning. Privatisation of the water gas and electricity supply, without tough regulation has been a major contributor to this problem.

Is there anything that you wouldn't blame on Thatcher?

We are in a world market and have to compete to buy gas (LNG) with the rest of the world. A shipload of gas arrived from Australia last week

UK to receive shipment of Australian gas next week

As Europe looks for alternatives to Russian energy, the UK is set to get an LNG delivery from Australia.

www.bbc.co.uk

German power prices are higher than ours.

German Power Price Soars, Hitting 700 Euros for First Time Ever

www.bloomberg.com

The French government have nationalised EDF, as it couldn't afford to supply at the prices that the government set.

France to announce details of EDF nationalisation

The French government will announce on Tuesday details of its plans to fully nationalise EDF , giving it greater control of Europe's biggest nuclear power operator as the company grapples with an energy crisis.

www.reuters.com

Back in Germany, Uniper (a major energy company) just got a €15Bn bailout from the German government and they will be back for more.

At present usage levels there is a very real chance of Germany and therefore most of mainland Europe literally running out of gas in March. Sooner if the weather is bad.

The government could do something to limit the prices for domestic market, Scottish Power are suggesting a 2 year price freeze, at a cost of around £100Bn.

Scottish Power's £100bn plan for two-year energy bill freeze

The energy giant, which supplies gas and electricity to more than five million customers, warned the looming jump in energy prices will be 'truly horrific'.

news.stv.tv

This is the domestic market only.

 

[japancool]

It didn't help though that the Rough facility was shut down a few years ago.

 

[japancool]

I'm afraid I'm still not seeing the argument for NOT slapping a larger windfall tax on the extraction companies.

 

[NickGrogan]

It didn't help though that the Rough facility was shut down a few years ago.

Rough is being reopened, but it not big enough to make much difference, it can hold a few days worth, but needs to be filled at current prices.

 

[japancool]

Rough is being reopened, but it not big enough to make much difference, it can hold a few days worth, but needs to be filled at current prices.

Out of interest, the most expensive place to fill up your car in Europe is apparently Norway - which is a net exporter of oil and the O&G company, Equinor, is state-owned. Go figure, as Americans would say.

 

[UKSBD]

I'm afraid I'm still not seeing the argument for NOT slapping a larger windfall tax on the extraction companies.

How many have their main HQ in the UK and run the majority of profits via the UK tax system?

No point slapping a big windfall tax on a company if they pile all the expenses in one country and report the profits in another.

 

[japancool]

How many have their main HQ in the UK and run the majority of profits via the UK tax system?

BP and Shell, for starters.

 

[NickGrogan]

I'm afraid I'm still not seeing the argument for NOT slapping a larger windfall tax on the extraction companies.

Then what?

You need at least £50Bn to prop up the domestic market, 3 or 4 times more for commercial - every year.

But you still haven't fixed the problem, the physical shortage of gas. The gas runs out and the lights go out.

Subsiding prices will make it happen sooner.

 

[NickGrogan]

BP and Shell, for starters.

a 100% tax on BP for the last 3 years would net you £818M

 

[NickGrogan]

The total of all taxes paid by all companies was about £70B last year

HMRC tax receipts and National Insurance contributions for the UK (annual bulletin)

www.gov.uk

We need to increase this to at least £130B, I don't think 2 companies will cut it.

 

[japancool]

But you still haven't fixed the problem, the physical shortage of gas. The gas runs out and the lights go out.

Is there really a shortage? The UK imports about 16% of its gas, and only 3% from Russia. Obviously, everyone who Russia is targeting is now competing for it.

Even if a windfall doesn't cover 100% of the cost of propping up the market, that's no reason not to do it. A partial solution is better than no solution at all.

 

[japancool]

a 100% tax on BP for the last 3 years would net you £818M

On the other hand, if you just extended that back to Q2 this year, you'd net yourself a good £7 billion.

 

[NickGrogan]

Is there really a shortage? The UK imports about 16% of its gas, and only 3% from Russia. Obviously, everyone who Russia is targeting is now competing for it.

Even if a windfall doesn't cover 100% of the cost of propping up the market, that's no reason not to do it. A partial solution is better than no solution at all.

Yes, the shortage is real; our gas systems are connected to Europe, and gas flows in both directions at different times.

If we turn off the connections (I'm not sure if we physically can), then we will be breaking all kinds of rules/laws, and the European countries will presumably respond by cutting off the flow of gas and power to us.

Rolling blackouts across the Southeast spreading steadily North, businesses not allowed to use power at peak times, schools closed, hospitals running on diesel generators, etc.

 

[NickGrogan]

On the other hand, if you just extended that back to Q2 this year, you'd net yourself a good £7 billion.

You need £50B; you've got £7B

If UK based extraction companies pay 100% tax or a very high windfall tax, what will happen to supply to the UK in the medium term?

A partial solution is better than no solution at all.

How about a windfall tax on all businesses?

 

[japancool]

You need £50B; you've got £7B

Still better than needing £50B and having £0B.

If UK based extraction companies pay 100% tax or a very high windfall tax, what will happen to supply to the UK in the medium term?

Not suggesting either a 100% tax or a permanent tax. Even with a 50% tax, they will still make more profit than they would have otherwise made. The medium term supply won't be affected.

How about a windfall tax on all businesses?

Not everybody is making a windfall.

 

[NickGrogan]

Not everybody is making a windfall.

Even with a 50% tax, they will still make more profit than they would have otherwise made.

This applies to everyone, right?

 

[UKSBD]

If UK based extraction companies pay 100% tax or a very high windfall tax, what will happen to supply to the UK in the medium term?

I dare say accountant will be crunching figures and if it gets near a a certain figure the extractors will just switch off the drills and leave it under the sea until the figures are in their favour again, much like the land grabbing property investors who just sit on land.

That would be even more catastrophic, they have us over a barrel.

 

[japancool]

This applies to everyone, right?

Well, I don't much care to play semantics, but no, it doesn't. The extraction companies will still make more money with a 50% tax than they would have done had the price of oil and gas not skyrocketed. That applies to almost no one else.

But by all means, if any company is making a "windfall", tax them. Amazon should have been taxed on the windfalls they made during the Covid lockdowns.

 

[Newchodge]

Well, I don't much care to play semantics, but no, it doesn't. The extraction companies will still make more money with a 50% tax than they would have done had the price of oil and gas not skyrocketed. That applies to almost no one else.

But by all means, if any company is making a "windfall", tax them. Amazon should have been taxed on the windfalls they made during the Covid lockdowns.

Banks are also making windfall profits due to the interest rate rises.

 

[japancool]

I dare say accountant will be crunching figures and if it gets near a a certain figure the extractors will just switch off the drills and leave it under the sea until the figures are in their favour again, much like the land grabbing property investors who just sit on land.

That would be even more catastrophic, they have us over a barrel.

Given that BP just doubled their profit on half the revenue compared to the previous quarter, it seems like it would have to drop a long way.

 

[japancool]

Banks are also making windfall profits due to the interest rate rises.

Banks, more than most, probably deserve to have a windfall tax slapped on them. Because they sure ain't passing on those interest rate rises to savers.

 

[UKSBD]

Given that BP just doubled their profit on half the revenue compared to the previous quarter, it seems like it would have to drop a long way.

That's what the accountants will be looking at

 

[UKSBD]

That's what the accountants will be looking at

Sell something this year for £10 a unit taxed at 80%

Leave it under the sea for a year and sell twice as much next year for £7 a unit taxed at 50%

 

[japancool]

Sell something this year for £10 a unit taxed at 80%

Leave it under the sea for a year and sell twice as much next year for £7 a unit taxed at 50%

If it costs you £5 to produce, you're making exactly the same profit either way around.

 

[japancool]

Inflation: Who is benefiting from soaring prices?

Many households are feeling the pinch of higher prices, but which sectors are benefiting from them?

www.bbc.co.uk

These are the people making windfalls.

 

[UKSBD]

If it costs you £5 to produce, you're making exactly the same profit either way around.

Which is why I say accountants will be crunching figures - Sway too far one way and the drills get switched off. Or more likely, they just fill up their reserve banks and start selling again 1st day of the financial year when windfall tax is dropped.

 

[Newchodge]

Which is why I say accountants will be crunching figures - Sway too far one way and the drills get switched off. Or more likely, they just fill up their reserve banks and start selling again 1st day of the financial year when windfall tax is dropped.

Rather than a windfall tax why not have permanent tiered CT depending on profit:turnover ratio? As there is for personal income tax?

 

[UKSBD]

Rather than a windfall tax why not have permanent tiered CT depending on profit:turnover ratio? As there is for personal income tax?

As long as that doesn't result in them shifting profits to another, more favourable tax country.

There need to be global agreements on preventing companies exploiting favourable tax systems

 

[MarkOnline]

Ask yourself, would you rather be on benefits in the UK or on a surgeons salary in the DRC.

Havin 10 minutes to spare I thought I would check.

Job seekers UK £77 week
Surgeon DRC £207 week. I would rather be a surgeon in the Congo, based on salary. I would be making serious enquiries how I could come and work in the UK for more money.

 

[WaveJumper]

Well i can't believe I am going to mention this but did not President Trump warn Europe "don't buy all your energy from Russia" what did we do ........ suckered into the come buy from me Im your friend cheap oil and gas here . buy buy buy, and then he starts to turn the tap off and our government look surprised. Putin started on his quest to cause major problems to our economies way before he invaded Ukraine. The fact that his plan as subsequently on some levels backfired he has still caused major global economic issues.

On another note lets not forget the oil, gas and mining operations around the rest of the world are generally getting their commodities out the same holes they have had for the last 25/30 years so I ask myself where's the huge cost rises for them.

Just like the shipping companies they are profiteering and who's going to stop them, the collective leaders from around the world where the profits go, and then of course we have the commodity traders making hay whilst the sun shines as cargos are sold six times over before they even reach a port.

And on another thread above we've had near 0% interest rates for a few years now and yet credit card interest rates have never gone down, those banks just sit back and collect from the retailers and the customer. What a great business model that is.

Rant over I had better go each my lunch

 

[Mark T Jones]

Rather than a windfall tax why not have permanent tiered CT depending on profit:turnover ratio? As there is for personal income tax?

History has shown that the main problem with taxing success is that it encourages failure

Or shenanigans

Or offshoring.

It also has a tendency to come across as bitter & resentful.

On the other side,, it is funny how we celebrate success until we see it costing us money.