Viewpoint: Economic storm clouds darken
A grey and overcast summer is set to be followed by a winter of overarching gloom. And that’s not a weather forecast: the economic bad news that has been building over the holiday months is gaining momentum.
Last week Northern Ireland’s consumer council described it as an “economic tsunami”. The bad is turning worse.
On top of the property slump and inflating prices at the petrol pump comes confirmation of what every family shopper already knew instinctively. Food prices are rising sharply — as much as 10% in the past year — along with everything else.
Savings are shrinking and debt is climbing. House repossessions are on the rise. Home heating oil is up by about 80% on last year, in spite of recent drops in the price of crude oil.
And this week householders must brace for more storms battering their finances. NIE and Phoenix Gas, two of the biggest energy providers in North
ern Ireland, are expected to confirm major price hikes. Average electricity bills are expected to soar by as much as £140, to about £600 annually.
Gas prices, according to a series of projections, are expected to climb and continue climbing for the foreseeable future. Wholesale gas costs have more than doubled in the past year, for a series of reasons. The UK’s once mighty North Sea supply is dwindling. Pipeline problems have reduced capacity from other sources, and when it comes to major supplies on the Asian steppes, Northern Ireland is at the end of a long chain of Western consumers. We get what’s left.
In some respects, this turnaround has happened rapidly. It’s not so many years ago that gas was being hailed as the cheap alternative for our energy needs, encouraging many householders to convert their supplies. Ballylumford Power Station was converted to gas eight years ago, partly on the basis that it would bring us cheaper electricity. Now it seems the opposite is true. Much of the pinching in our pockets is tied up in global economics. It’s often said that an upturn in the American housing market will re
lieve us all. That may be true, but it’s also clear that energy costs will be a huge factor in our future finances. The age of cheap energy appears to be well and truly over. For a society enjoying flat screen TVs and constant computer access, that means a change in consumption habits. Fundamental changes like that, however, don’t happen instantly.
Energy is a cornerstone of modern society and we need to guard our access to it carefully. Northern Ireland may need its own strategic reserves and previous environmental concerns about local supplies of lignite may have to be reconsidered.
But there is another measure. The extra money we’re paying on energy bills means extra money in the Treasury. Weekend revelations about the Government’s earnings from energy should resound with families facing bigger quarterly bills. Hopefully Gordon Brown won’t consider this money as reserve for the general election. He should use it to cut taxes and ease the woes on our wallets.