Business

Inflation – it's not a good thing (nor is families not being able to feed their children)

Right now we are at the whim of Opec and the oil/energy companies, and our inflation is in the hands of a few, which is not a good thing
Peter McGahan

ENERGY prices, inflation, and all things annoying. Families not being able to feed their children isn’t a good thing. It isn’t a good thing.

I’ve covered the wealthy becoming obscenely wealthy off the back of society’s pains, but I’ve been asked a few times since about fuel prices. Put your seatbelt on for this ride.

Firstly, more than 80 per cent of the world’s population live in countries that are net importers of oil. You are therefore at the whim of the extraordinary cartel that is Opec and oil/energy companies with profit as their goal. Our inflation is in the hands of a few. That is not a good thing.

Fuel prices impact the cost of everything: transport, food delivery, manufacturing, food costs. Everything.

The UK’s fuel price is quite astonishing. It is 155 out of 165 countries in terms of its price. Only 10 countries in the world are more expensive. The top four in terms of cheapness are, and have been on the West’s hit list for some time - Venezuela, Syria, Libya and Iran.

‘But it’s down to the oil price’. Yeah right.

In 2008 when I covered this subject, oil reached $133 a barrel, and petrol was 119.4 per litre. Today oil is $113, but petrol is 191 litre. In April 2020, the oil price was negative, ie less than $0, but the fuel price in the UK was 119.9 per litre. Somebody somewhere is filling their boots.

From its low price of $59 in March 2020, Chevron’s share price soared to $178. These are companies where we should be using less and less of their products.

In 2021, electric vehicles made up 18.5 per cent of all newly registered cars. There are now over 790,000 plug-in hybrids and 477,000 electric vehicles in the UK. That has to have had a large impact on demand – you would have thought. I use very, very little fuel in my normal week. Previously it was over £2,500 per year but that was back in 2012 pre my move away from fuel dependency cars.

Why is the price so expensive then? A report by REN21 concluded that 112 nations actually subsidise fossil prices. REN21 provides a forum for international leadership on renewable energy. The UK is not part of it.

Redirecting less than 30 per cent of those subsidies to green energy and renewables would pay for the global transition to green energy, something the fossil fuels may not want! It would provide 85 million jobs and just four million would be lost moving away from dirty fuels.

The UK announced in 2017 it would be allocating no subsidies to green power projects until 2025 at the latest. I’m sure you may be piecing this together.

The UK government takes 29 per cent of the fuel price in fuel duty. Vat is charged at 20 per cent on top of that. So, around £46 of a 55-litre fuel tank goes to the UK in taxes.

A report on lobbying from an anti-corruption group was astonishing. Just four per cent of lobbyists are covered by the UKs register. Eight out of 10 of the frequent lobbyists are from the large FTSE companies. Some 73 MPs received £3.4m last year for external roles.

Meanwhile, lobbyists are quietly running parliamentary groups on energy and climate policy. Read that again. The UK petroleum industry association is playing a key role in the running of the All-Party Parliamentary Group (APPG). The trade associations which receive substantial funding from the large energy companies also provide public relations and admin support to MPs!

Some of the MPs in the group are those blocking windfall taxes and asking for more investment in the fossil fuel sector.

More than 500 lobbyists with key links to oil and gas attended the COP26 conference in Glasgow. It’s just nuts.

In the US, the American petroleum institute (API) receives vast sums of money from energy companies. Shell openly states it gave $10 million, while others are not public. It has an annual revenue of over $240 million. One of its previously hired professional lobbyists was forced to resign from the Council of Environmental Quality after tampering with climate assessments to downplay scientific evidence of global heating and to create doubts.

He was soon after hired by an energy company. With the goal of making climate change a non-issue, the API put together a multimillion pound disinformation campaign. When you see who is behind this, it all becomes clearer.

This surge in profitability could well be energy company’s last ‘pay cheque hurrah’.

Peter McGahan is chief executive of independent financial adviser Worldwide Financial Planning, which is authorised and regulated by the Financial Conduct Authority. If you have a financial query, call Darren McKeever on 028 6863 2692, email info@wwfp.net or visit wwfp.net

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