For too long – and often for political reasons – retail energy prices have been kept at artificially low levels.
Now, thanks to a perfect concatenation of unfortunate events, that’s about to change and retail customers could face a long, hard winter of rising prices.
The silver lining to this hardship – if there is one – is that over the long run it could help wean society off its current reliance on oil and gas as its main source of energy and encourage the build-out of the renewable energy assets needed to address climate change.
There might be other positive side-effects too – such as encouraging householders to invest more in home insulation or hastening the switch to carbon-neutral fuels such as hydrogen.
Even so, government will have a role in blunting price increases if they begin to take up too great a percentage of people’s incomes – especially low-income families. As ever, the priority is to balance what we need from an environmental standpoint with what’s achievable – particularly as we build on the post-pandemic economic recovery.
Paul Flood, multi-asset manager, Newton Investment Management.
Doc ID: 716950