Home » The unequal Effects of the spiralling Cost of Fuel
The unequal Effects of the spiralling Cost of Fuel
The lucky ones among us quite like winter; the snow, Bonfire Night, the run up to Christmas with friends and family, and long winter nights curled up with a good book and a mug of hot chocolate.
Sound’s rather nice doesn’t it? But whether winter is your thing or not, the reality for millions in the UK and around the world is nothing like that Christmas card picture. There is a long, hard winter ahead, which will be made all the more difficult by the rampant inflation across Europe, caused in the main by the fuel supply crisis.
Prices have been steadily increasing ever since the end of the pandemic as an increase in post COVID demand became a big driver behind the gas price hikes. The greater need for energy since the price fall of March 2021 and the invasion of Ukraine in 2022 has seen prices increase more than ten-fold and return to pre-pandemic levels.
For the wholesale electricity market, there has been a reduction in available power supplies compared to last year which, combined with higher gas prices, has led to an increase in the wholesale price of electricity, and we have seen increases of around 400-600 per cent in some cases.
Governments around the western world are trying to cushion the impact for their voters and, in the UK our new Prime Minister has been making headlines with her attempts to introduce Trussenomics. But any assistance for people to meet their fuel costs was pretty much missed as Liz Truss instructed her (former) Chancellor Kwasi Quarteng to abolish the 45 per cent rate of income tax, a move which cost just £2bn (a drop in the ocean in post 2019 spending terms) but was a mighty PR clanger which gave opponents of the government an open goal to accuse the Tories of helping their mates…and even Sir Keir Starmer couldn’t miss that one!
And Truss says she is helping households by capping fuel bills at around £2,500. But who is she helping? The social housing tenant in Doncaster or the elderly citizen huddled around an electric heater in Burnley?
No. A cap at £2,500 will help the former Tories in Richmond and the Home Counties who left the Conservative Party in their droves over the Brexit spat; and Truss believes they will be ready to return, now that there are more important things to worry about than applying for visas to allow their kids to get nanny jobs on the French Riviera.
As usual, the people who will suffer most as a result of spiralling fuel, food and housing costs are those who have the least in the first place. Data from the Office of National Statistics shows that, while rising household bills will affect most households across the country, they will disproportionately affect those in the most deprived areas. Income is one measure used to measure deprivation, and data from the Living Costs Food Survey show that housing, fuel and power is the least income-elastic category of spending.
So that leaves food, and with the inflation rate in the UK and Europe currently running at ten percent, the pressure as winter draws in could become too much for too many.
It’s a story we’ve been all too familiar with since Dickensian times, and in 2022 it’s one we should be ashamed of.
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