Weekly News Review - 7th July 2023
Oil giant Shell warns cutting production ‘dangerous’
The head of oil giant Shell has drawn criticism for suggesting that it would be dangerous and irresponsible to reduce the world’s oil and gas production. Shell chief executive Wael Sawan said in an interview with BBC that cutting production risked worsening the cost of living crisis by limiting global energy supplies and pushing up bills.
Mr Sawan’s comments have angered climate scientists and campaigners as it is widely accepted that reducing fossil fuel production is crucial in limiting the rise in global temperatures. Last month Shell announced new plans to maintain its levels of oil and gas production until the end of the decade having previously pledging to cut oil extraction.
Head of the UN António Guterres recently said investment in new oil and gas production was “economic and moral madness”. However, Mr Sawan responded to these comments by saying: “I respectfully disagree. What would be dangerous and irresponsible is cutting oil and gas production so that the cost of living, as we saw last year, starts to shoot up again.”
Head of climate at Friends of the Earth, Jamie Peters, said: “Let’s be clear, companies like Shell are fuelling both the climate crisis and the soaring cost of energy. They are profiting from the misery of ordinary people while destroying the planet, and they’re making a cynical case to continue locking us into the volatile fossil fuel markets that are the root cause of the energy crisis.”
Mr Sawan also said that as a result of last year’s record high global gas market prices, poorer countries such as Pakistan and Bangladesh were unable to afford LNG shipments, which were instead diverted to Europe. He said: “They took away LNG from those countries, and children had to work and study by the light of candles. If we’re going to have a transition it needs to be a just transition that doesn’t just work for one part of the world.”
Claire Fyson, the co-head of climate policy at Climate Analytics, a global science and policy institute, said: “The idea that it’s a choice between our addiction to fossil fuels or working by candlelight is a gross misrepresentation of reality, when we know renewables are cleaner, cheaper and better for public health.”
Weak competition added 6p to supermarket fuel prices
An investigation by the Competition and Markets Authority (CMA) has found that increased supermarket fuel margins led to drivers paying an extra 6 pence per litre between 2019 and 2022. The report also found that increased margins on diesel across all retailers have cost drivers an extra 13 pence per litre from January 2023 to the end of May 2023.
Following the report, the CMA recommended that a new fuel finder scheme be implemented to give drivers access to live, station-by-station fuel prices to revitalise competition in the retail road fuel market. Currently, prices are only provided at the petrol stations themselves. However, the creation of a new online scheme would allow drivers to compare up-to date prices at nearby stations, subsequently increasing competition.
The CMA also recommended that the system is backed up by a fuel monitor which would continually track prices and margins and recommend further action if competition continues to weaken in the market. The CMA found that Asda’s fuel margin target in 2023 was more than three times what it had been for 2019, while Morrisons had doubled. Other retailers, including Sainsbury’s and Tesco, also decided to raise their prices in line with these changes.
Sarah Cardell, Chief Executive of the CMA, said: “Competition at the pump is not working as well as it should be and something needs to change swiftly to address this. Drivers buying fuel at supermarkets in 2022 have paid around 6 pence per litre more than they would have done otherwise, due to the four major supermarkets increasing their margins. This will have had a greater impact on vulnerable people, particularly those in areas with less choice of fuel stations.”
“We need to reignite competition among fuel retailers and that means two things. It needs to be easier for drivers to compare up to date prices so retailers have to compete harder for their business. This is why we are recommending the UK government legislate for a new fuel finder scheme which would make it compulsory for retailers to make their prices available in real time. This would end the need to drive round and look at the prices displayed on the forecourt and would ideally enable live price data on satnavs and map apps.”
“Given the importance of this market to millions of people across the UK this needs to be backed by a new fuel monitor function that will hold the industry to account. As we transition to net zero, the case for ongoing monitoring of this critical market will grow even stronger, so we stand ready to work with the UK government to implement these proposals as quickly as possible.”
High energy use businesses urged to claim extra discount on energy bills
The government have issued a reminder that energy intensive businesses only have one month remaining to apply for support through the Energy Bills Discount Scheme. Companies have until July 25 to apply, with discounts applied to their bills until April next year.
The Energy Bills Discount Scheme was introduced in April 2023 to replace the more generous Energy Bill Relief Scheme. The scheme was put in place to keep costs down by offering a higher rate of support for those using significant amounts of energy to deliver their services and goods – such as ceramic and textile firms.
Consumer Energy Minister Amanda Solloway also issued a reminder to heat network operators that they have a legal requirement to apply, to ensure a fair deal for their customers who would otherwise face higher energy bills compared to those covered by the energy price cap. Companies could face a fine of up to £5,000 if no action is taken.
Solloway said: “Today marks one month to go for businesses and heat network operators to apply for support that could cut their energy bills by as much as a fifth – I would urge all of those who haven’t already to set time aside, check they are eligible, and get their details registered. Energy prices are falling but we will continue to stand by businesses and do all we can to help and make sure they remain competitive in a challenging market, as we have done over the winter.”
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