Nuclear

Life in the Middle East never stands still. The inexorable progress of Iran towards some form of nuclear capability has not been halted by the negotiations which began at the end of last year and which have now run on for almost six months. In the absence of a deal others are assuming the worst. Unilateral direct action by Israel still cannot be definitively ruled out. Meanwhile, other countries are feeling the need to prepare their own deterrents. Having lost confidence in the umbrella of US security the Saudis are developing their own capabilities. The dangers for the region and for the world’s energy markets are enormous. Read more

George Osborne in his Budget speech on Wednesday talked, correctly, about US industrial energy costs being half those of the UK. The situation has deteriorated rapidly over the past five years. His proposed response is worth quoting directly:

“We need to cut our energy costs. We’re going to do this by investing in new sources of energy: new nuclear power, renewables, and a shale gas revolution.”

This must be a speechwriter’s joke. A line written in where the content bears absolutely no relationship to reality. New nuclear at £92.50 a megawatt hour will double the current wholesale price of electricity. New offshore wind on the Department of Energy & Climate Change’s own figures, which many feel are too low, will cost more than £120/Mwhr. These are not secret figures. They are well known in the Treasury, as is the risk of generating capacity failing to meet demand. There was no mention of that little problem. Read more

Older UK readers will remember the Green Goddesses – fire engines held in reserve for moments of national emergency. At the height of a crisis army drivers would maintain an essential service. Well, lo and behold, some new Green Goddesses are to be created as the government launches its “emergency electricity reserve”. Read more

What happens now for the numerous companies, led by the oil majors, who have chosen to invest in Russia? The surprising answer may be that the short-term risks are less serious than the longer term prospects of disengagement as energy consumers, especially in Europe, reduce their dependence on a supplier they do not trust. Read more

I am glad I don’t live in eastern Europe and I can quite understand why against a good deal of economic logic Algirdas Butkevičius, the Lithuanian prime minister, is pushing very hard to force his country into the eurozone. The reason is the reassertion of Russian power across the region. The advance is not military but economic with energy issues to the fore. Comecon is being recreated. Read more