Inflation crisis: Due to various factors including war in Ukraine and Covid-19.

[brad465]

The other lot? You think I'm being too critical of Thatcherite policies of the 1980s and their short-sighted, quick profit now, screw tomorrow thinking?

True Britain was not in a great place in 1979, but bleeding the patient, like some medieval surgeon, wasn't the best way of curing it.

Neither the way things were being done pre-Thatcher, nor the things that have happened as a result of Thatcher, are the way to go forward from here. The world faces a whole new plethora of challenges and many of these will require new solutions. For example, infinite growth is both impossible and the biggest driver of climate change, and happens because our entire economic model is based on boosting GDP. The way to solve this is to base an economy/society on alternative measures of wellbeing with a sustainability focus.

Furthermore, the events post-2008 have absolutely not been how to manage an economy, where "growth" was achieved through producing and buying goods off cheap borrowed money and inflating housing and stock market bubbles, which benefitted a small group in society and created a "k-shape" recovery. It's entirely possible the relatively low inflation of the last decade largely arose as a result of this, in particular through perhaps burying it in inflating those market bubbles.

 

[Ediswan]

CPI on Office of National Statistics website goes back to Jan 1988 so not sure where 1997 comes from

CPI was introduced/defined in 1997. Figures for previous years will have been back-calculated using existing data.

 

[gg1]

Brexit is only the tip of the iceberg. Keynesians are to blame for much of the financial mismanagement which has plagued western economies for 60 or 70 years, you can't use deficit spending to stimulate growth and suffer no consequences.

The major economies of the world haven't practised Keynesian economic policies since the 70s, attempting to blame them for the state of of western economies in the 4-5 decades since then is clutching at straws.

 

[yorksrob]

The other lot? You think I'm being too critical of Thatcherite policies of the 1980s and their short-sighted, quick profit now, screw tomorrow thinking?

True Britain was not in a great place in 1979, but bleeding the patient, like some medieval surgeon, wasn't the best way of curing it.

I think they're known as "the Austrian school" as opposed to the Keynesians.

 

[Mat17]

Yes the Austrian school, also with its issues too.

 

[brad465]

Here's the latest on the potential consequences of the gas price crisis, in particular with a graph highlighting what gas prices have done in the last year:

Gas crisis: Pig farmers fear they may have to cull animals

A shortage of carbon dioxide used to stun pigs at abattoirs means a backlog of animals is growing.

www.bbc.co.uk

Pig farmers fear they may soon have to start killing their animals because of a carbon dioxide shortage at abattoirs caused by soaring gas prices.

CO2 is used to stun animals before slaughter, but some suppliers of the gas have temporarily halted production due to rising energy costs.

"Thousands of pigs are backlogged on farms," said farmer Kate Morgan.

"If we can't kill our pigs in an abattoir, then unfortunately we will be resorting to killing them on farms."

Carbon dioxide used by the meat industry is a by-product of fertiliser production. The gas is also used to keep food fresh as well as in dry ice and fizzy drinks.

CF Industries, the US-based business which produces about 60% of the UK's food grade CO2, has suspended production at two UK fertiliser plants. Norwegian firm Yara has also cut production at a number of European factories.

 

[Mat17]

Is it an irony that they've been banging on about cutting CO2 emissions and now they're complaining there's a CO2 shortage!

 

[brad465]

Is it an irony that they've been banging on about cutting CO2 emissions and now they're complaining there's a CO2 shortage!

You're far from the first (and probably not the last) to say this. Obviously CO2 already in our atmosphere currently cannot be captured feasibly; CO2 be captured as a by product of other reactions more or less at source.

This does seem to be a feedback loop on inflation: gas prices rise to the point that certain industries can't afford to buy gas, so have to cut back operations, which in turn creates shortages caused by those cut back operations, further driving up inflation on top of the rising gas price-induced inflation.

 

[Mat17]

Catch 22 no?

 

[Ediswan]

Obviously CO2 already in our atmosphere currently cannot be captured feasibly

Apparently it can: https://www.iea.org/reports/direct-air-capture

Solid direct air capture technology makes use of solid sorbent filters that chemically bind with CO2. When the filters are heated, they release the concentrated CO2, which can be captured for storage or use.

(I don't study the topic, it just happened to come up on R4 earlier today.)

 

[Starmill]

Apparently it can: https://www.iea.org/reports/direct-air-capture

(I don't study the topic, it just happened to come up on R4 earlier today.)

Technically it can, yes. Whether it can be done efficiently and at scale is another matter.

 

[Ediswan]

Technically it can, yes. Whether it can be done efficiently and at scale is another matter.

And in context, that is a two part question.

* Can it be an economic source of CO2 for food and other industries ? I tried to find figures for CO2 consumption. Failed. Google just returns articles on production. Others may do better.

* Can it make a useful contribution to reducing (the rise of) atmospheric CO2 ? Some seem to believe it can, but figures are also hard to find.

By chance (I think) a scale-up plant has just gone into operation. 4,000 tons per year is a flea bite in the overall scheme of things, but you have to start somewhere. This is in Iceland, the input power is geothermal.

https://energyindustryreview.com/en...est-direct-air-capture-and-co2-storage-plant/

 

[Peter Sarf]

.........

2. Sunak's Stamp Duty holiday just drove up prices with first time buyers rushing to get in before it ended, no thought at No 11 that maybe it will mean borrowers will have maxed out, that is before the price rises (I bet Council Tax goes up by the maximum, and I don't think the Police Precept is capped, as well as Council charges for parking, green waste collection, whatever). Interest Rates are only going one way. I really feel for young people. I wish I knew what the answer is but we are in a pretty difficult place just now and I don't see anyone with answers.

..........

Oh yes market tinkering highlighting how little Sunak and others know. Incredibly stupid and it has happened before. In 1988 The Tories decided to alter MIRAS (Mortgage Interest Relief At Source) rules so two unmaried people could no longer each claim the maximum £30,000 allowed. It was unfair on married couples to be fair. But the announcememnt was made in the early Spring of 1988 when the housing market normally picks up anyway. I had an offer turned down because the vendor could see demand might rise - so could I. The deadline was something like October when the market normally dies down. I was trying to buy and watched prices for two bed semis rise from £60k to £100k then of course demand collapsed. Saddest thing was many sales that were up at the high end fell through when the buyers could not actually get a mortgage. The irony was it was forcing others who could scrap together the money to also offer £100k and managed to buy. So stoke demand in a market at a time when it has high demand anyway. I remember the term negative equity coming along. Sunaks actions regarding the housing market have been very very irresponsible.

I'm fixed rate for 10 more years at 1.6%

Thats a good deal. Save your spare pennies and overpay while you can.

And in context, that is a two part question.

* Can it be an economic source of CO2 for food and other industries ? I tried to find figures for CO2 consumption. Failed. Google just returns articles on production. Others may do better.

* Can it make a useful contribution to reducing (the rise of) atmospheric CO2 ? Some seem to believe it can, but figures are also hard to find.

By chance (I think) a scale-up plant has just gone into operation. 4,000 tons per year is a flea bite in the overall scheme of things, but you have to start somewhere. This is in Iceland, the input power is geothermal.

https://energyindustryreview.com/en...est-direct-air-capture-and-co2-storage-plant/

I think CO2 is a by product (amongst others) of producing Nitrogen and Oxygen from air. All the process does is separate the different gasses.

 

[brad465]

Anyone want to take a punt at how long before this story "hasn't aged well"?

Gas crisis: No chance lights will go out, says government

Business secretary Kwasi Kwarteng says the UK has "more than sufficient capacity" amid gas price spike.

www.bbc.co.uk

There is "no question of the lights going out" this winter as a result of huge rises in gas prices, the business secretary has said.

Kwasi Kwarteng said he does "not expect supply emergencies" and described warnings about shortages as "alarmist".

His statement comes as smaller energy providers battle to stay afloat due to gas price hikes making price promises to customers undeliverable.

High demand for gas and reduced supply are behind a surge in wholesale prices.

Customers are protected from sudden hikes in wholesale gas prices through the energy price cap, which is the maximum price they can be charged on a standard tariff.

However, the cap means energy firms are unable to pass on higher wholesale costs to their customers, which is forcing some - mostly smaller companies - to go out of business.

To provide some context, someone on the FT site pointed out that on the 9th August this year Kwarteng had said he "vows to put free market approach at heart of UK's Covid recovery"; just over a month later there's talk of subsiding fertiliser production and offering emergency state-backed loans to support firms taking on customers from companies going bust.

 

[birchesgreen]

So do we starve first or freeze to death? Hmm choices choices.

 

[Gostav]

So do we starve first or freeze to death? Hmm choices choices.

Will not freeze or starve to death, just the standard of living may slowly decline. Think about "poor Eastern Europe", those poor trains, poor buildings, poor vehicles, they weren't what they were in the beginning.

 

[GusB]

Will not freeze or starve to death, just the standard of living may slowly decline. Think about "poor Eastern Europe", those poor trains, poor buildings, poor vehicles, they weren't what they were in the beginning.

Won't we? For some it may well be the case. When I was looking for a new electricity quote, the lowest quote I could find was around £80 by monthly direct debit (I had been paying £45). Anyone who is in receipt of Universal Credit will find that this is the last month of the £20 per week uplift. That's not a slow decline!

 

[telstarbox]

What's the story with the energy suppliers - that not enough of them can get a critical mass of customers to make a profit?

 

[skyhigh]

What's the story with the energy suppliers - that not enough of them can get a critical mass of customers to make a profit?

Most of the smaller ones buy in energy, provide customer service then aim to sell it on at a profit. If the cap is lower than the costs of the energy, or you have too many customers on fixed deals below the market price for purchasing energy, you begin to struggle.

For reference I'm on a fixed electricity tariff of 12.1p/kWh during the day and 5.5p overnight. Lots of suppliers are now offering fixed tariffs around the 20p mark.

 

[XAM2175]

What's the story with the energy suppliers - that not enough of them can get a critical mass of customers to make a profit?

Most of the smaller ones most threatened by the current situations are at least vaguely profitable in normal times, but they don't have a great deal of spare cash on hand. The difficulty for them is that they need to pay the higher prices that their suppliers are asking in the near term, but their ability to recover that outlay is hampered by the Ofgem price caps.

Given that the caps can only increase by a certain amount each time, it'll be April next year before domestic suppliers can even begin to bill at rates near-ish to the market prices and mid-May before they actually start to see that money come in - that's the gap they're saying they need help to cover.

 

[duncanp]

Why is there a CO2 shortage and how will it hit food supplies?

The UK's food industry has been told it must pay five times more for carbon dioxide in future.

www.bbc.co.uk

The amount of carbon dioxide (CO2) the UK produces has halved - prompting warnings of supermarket shortages.
That's because food and drink firms use CO2 in hundreds of products, from fizzy drinks to bagged salads.

Two large UK fertiliser factories, on Teesside and in Cheshire, have stopped work because of soaring wholesale gas prices.
The plants also make CO2 - as a by-product.
Because the fertiliser factories have stopped working, there has been a cut of 60% of the UK's food-grade carbon dioxide supply.

Does anyone think it is slightly ironic that we are all being urged to cut emissions of carbon dioxide by people like Greta Doomberg, whilst at the same time we are being warned of food shortages because we are not producing enough CO2?

You couldn't make it up really.

 

[Domh245]

Does anyone think it is slightly ironic that we are all being urged to cut emissions of carbon dioxide by people like Greta Doomberg, whilst at the same time we are being warned of food shortages because we are not producing enough CO2?

Because as we all know, the co2 sent up a flue or out an exhaust pipe is what they use for industrial processes...

 

[Starmill]

Why is there a CO2 shortage and how will it hit food supplies?

The UK's food industry has been told it must pay five times more for carbon dioxide in future.

www.bbc.co.uk

Does anyone think it is slightly ironic that we are all being urged to cut emissions of carbon dioxide by people like Greta Doomberg, whilst at the same time we are being warned of food shortages because we are not producing enough CO2?

You couldn't make it up really.

Not really. Atmospheric carbon dioxide and other greenhouse gases are one thing. Compressed carbon dioxide pure enough for industrial purposes is another. It takes energy to turn the former into the latter.

 

[eMeS]

Why can't fertiliser be stockpiled, with CO2 being produced as normal, and the government taking a financial interest in the stockpiled fertiliser?

 

[Dai Corner]

I don't think the fertiliser plants take atmospheric carbon dioxide, compress it and put it in tanks.

It's produced as part of the chemical reactions used to make fertiliser and will eventually find its way into the atmosphere after being used in the food industry or elsewhere.

Whether the amount involved is significant compared with other sources or that occurring naturally in the atmosphere I don't know, but I doubt it.

 

[duncanp]

I know there are good reasons why CO2 emissions from cars and central heating flue pipes can't be turned into CO2 suitable for use in food processing, but I was just commenting on the irony of a shortage of CO2 while we are all being told to cut CO2 emissions.

The Telegraph is reporting in its live feed that the government is working on a deal to resolve the immediate shortage of CO2, by providing "assistance" to the firm that owns the fertliser plants that have shut down.

Presumably this means taxpayers having to put their hands in their pockets again.

Politics latest news: Deal to resolve 'critical' CO2 shortage 'imminent', says minister​

A deal to get CO2 production back up and running could be struck as early as today, a minister has said, as the Government races against time to prevent food shortages.

Pig farmers have warned they will have to slaughter animals on their land for render because of a growing backlog at abattoirs and processing plants, sparked by the closure of two fertiliser plants last week, which supply 60 per cent of the UK's commercial carbon dioxide.

The British Retail Consortium said it expected to see food shortages by the end of the week, while pork suppliers warned of "farmageddon" within 10 days.

But Kwasi Kwarteng, the Business Secretary, said he was hopeful a deal would be agreed today, following "candid" and "fairly frank" conversation with Ton Will, the American owner CF Industries. Rishi Sunak, the Chancellor, has also been involved in talks as it "may come at some cost" to the country.

Asked if the Government was prepared to subsidise a foreign company, he said he was "looking at different ways we can provide support", and insisted any support would be temporary.

The Government was "averse" to nationalising the company, but he was "prepared to look at every solution" to get production back up and running, Mr Kwarteng told BBC Radio 4's Today programme.

He told Sky News: "It’s pretty imminent - this week, we will have a very clear plan to get CO2 production back up again... I am very confident, hopeful, we can sort it out by the end of the week."

Asked if that would include a subsidy, he told Times Radio the deal would "address" the high cost of natural gas. "The carbon dioxide situation is critical," Mr Kwarteng added.

 

[DarloRich]

i am sure it is nothing to do with brexit.

 

[LOL The Irony]

i am sure it is nothing to do with brexit.

Teesside and Cheshire, so no.

 

[Darandio]

Teesside and Cheshire, so no.

Before Brexit we were part of the internal EU energy market meaning prices within member states could be spread out and have a more balanced price regardless of outside fluctuations. Now we aren't and we're paying top dollar, fertiliser companies here cannot make it work at these prices so Brexit does has a part to play in it.

 

[ainsworth74]

Before Brexit we were part of the internal EU energy market meaning prices within member states could be spread out and have a more balanced price regardless of outside fluctuations. Now we aren't and we're paying top dollar, fertiliser companies here cannot make it work at these prices so Brexit does has a part to play in it.

Yes the way I've seen it explained is that the current energy issues haven't been caused by Brexit but that Brexit has made their impact worse than it would otherwise be (for the reason you outline).