If the proposed price hike in October goes through as planned, it is anticipated that the annual expenditure on energy by domestic consumers and businesses will climb by a factor of three.
It will lead to “severe” financial difficulties, and more than half of homes in the UK will be thrust into fuel poverty this winter as a result of it.
On the basis of the October increase alone, the latest economic study published by Offshore Energies UK (OEUK) projects that domestic spending on oil and gas will exceed around £100 billion in the coming year.
This is an increase of almost £70 billion, with the expenditure for 2021 amounting to a total of £35 billion.
According to the survey, companies are even more vulnerable to the impact of rising gas prices, as the unit price of gas has increased by 170% year on year, while the unit price of energy has increased by 37%.
According to predictions from the OEUK, the total amount spent by the industry might reach £108 billion, which is an increase from the figure of £36 billion spent in 2017.
The estimated numbers were derived from the annual statistics contained in the Digest of UK Energy Statistics report, which was used to compile spending information collected from consumers and businesses by the UK government.
It comes as the government agency that regulates energy prices, Ofgem, has just revealed that the price cap for electricity will climb to £3,549 in October. This represents an increase of 80% since April, and additional hikes are likely in 2023.
The new Prime Minister, Liz Truss, is being urged by the Organisation for Economic Co-operation and Development (OEUK), which represents more than 400 organizations, to guarantee that the fiscal regime is stable and that it boosts investors’ trust.
It is anticipated that Ms. Truss would make an announcement within the first week of her term regarding a slew of steps to combat rising prices, one of which may include the freezing of bills.
The analysis indicates that there are energy reserves equaling 15 billion barrels of oil, which is sufficient to supply the energy needs of the UK for the next three decades.
However, in order to make the most of these resources, it is strongly recommended that the United Kingdom Government publish the next round of oil and gas development licenses in the North Sea as quickly as possible, concurrently with a rapid growth of offshore wind power.
According to the research, the government needs to lessen its reliance on foreign trade and lessen its exposure to the risk of more drops in world prices in order to achieve the highest level of energy independence possible.
Acting Chief Executive Officer of the Organization for Economic Co-operation and Development (OEUK) Mike Tholen called the report a “red alert for UK energy security” and encouraged the UK government to wean itself off of its reliance on Russian oil.
According to the report, since over half of the United Kingdom’s gas and approximately 80 percent of its refined oils are imported, the majority of the additional dollars that are spent on bills will be provided to nations other than the United Kingdom.
Because of our North Sea reserves, the United Kingdom is able to defend itself – given that we make investments – while also constructing the low-carbon systems that will be necessary in the future.
He added, “The homes and companies of the UK cannot yet operate without these fuels, but Putin’s war in Ukraine highlights the risks of relying on other countries for energy.” He was referring to the conflict in Ukraine.
Because of our North Sea reserves, the United Kingdom has the ability to defend itself – given that we make investments – while also constructing low-carbon infrastructure for the future.
He continued by saying, “In terms of practicality, we require the incoming government to swiftly announce the next wave of oil and gas exploration licenses and to quicken the approval process for production.”
“Also, we are urging the government of the United Kingdom to prioritize tariff reform.
“At the moment, President Putin is in control of our energy markets, and he is intentionally driving up the price of gas to weaken both our and Europe’s resolve about the situation in Ukraine.
“We are unable to allow that to continue. We have to find an alternative to the current model, which permits the cost of electricity to be determined by the price of gas.
“This is also vital for our objective of heading forward into energy levels, where the majority of our generation comes from clean energy sources and nuclear power,”
According to Ross Dornan, the market intelligence manager at OEUK, “more investment in its own resources is the best approach for the UK to assure safe gas and oil supplies.” If that doesn’t happen, the United Kingdom will become even more dependent on imports.