It’s all about energy, Stupid!
The phrase “It’s the economy, stupid” hung on a sign in Bill Clinton’s Little Rock campaign headquarters to keep staff on message. It focused his successful 1992 US presidential campaign on the critical economic issue. In everywhere but the US, today’s phrase is, “it’s all about Energy, stupid”.
Most discussion of the Iran War has focused on the price of energy. But US and Israel’s attacks on Iran, and Tehran’s retaliation have produced the largest oil supply disruption in history, according to Professor Jason Bordoff Columbia University and founding director of the Center on Global Energy Policy.
In a cost-of-living crisis, price and who pays it are key considerations. But, in early June, as this is written, it’s still uncertain whether a ceasefire will lead to a Hormuz all clear or drag on interminably. Either way, supply is likely to be more disruptive than price. According to Wood Mackenzie, the leading oil supply and resource analysts, there’s an average of one month’s oil and gas stock worldwide. After all the ships carrying oil and gas have unloaded at their ports, we will face a shortfall of 10 million barrels a day. Production capacity taken out in the mutual bombings in Iran and the Gulf will take months, or years to rebuild.
Before the war, supply and demand were roughly in balance. To put this in perspective, ten million barrels a day is about the amount by which consumption fell in the first year of the COVID pandemic. Real shortages will hurt. Some countries are already on four day weeks.
But every cloud has a silver lining, and if every UK home were well insulated and upgraded to modern standards of building fabric, it’s been estimated that heating demand per home could fall by roughly 20%, and a 15% reduction in UK gas imports. That would plug the energy supply gap and importing that much less should significantly improve the UK’s trade balance and make the Treasury happy.
Come the hour, come the innovation, and in the nick of time, innovative industry thinking has transformed triple glazing, removing all the barriers to widespread use. It should enable the industry to go on a crusade to upgrade Britain’s homes.
That’s good for the country, good for homeowners and property owners, and good for the industry. All it needs is for the industry to recover its mojo and missionary zeal.
