The BBC and France24 both have stories today about the price of oil being near $99 per barrel, and instead of the usual downturn in barrel price at this time of year, there is indeed a concerning upward drift in oil prices.
Some things mitigate against this - oil is priced in US dollars, yet for both sterling and the Euro, the dollar is weak and therefore the worst of the price rises are ameliorated. Consider for a moment how the UK would be faring if oil was priced in Euros, with the pound at a record low against the Euro (not one that is making headlines in the UK currently, but for a number of us, it is THE most important indicator at the moment)?
The weak dollar is therefore a good thing for the UK, even if exporters are concerned, as the UK economy is fuelled, in every sense by oil. Power is generated using oil and gas - we closed the coal mining industry in the 80s if you recall. People get to work and to school by car - the BCC is right to say that public transport is not fit for purpose - there aren't enough routes outside the main hub and spoke systems, trains are overcrowded and delayed, buses ditto. From being a gas producer, the UK is now a net importer of gas, due to a somewhat misguided decision to allow power generation using natural gas in the early 90s.
So while there is a bit of a rise in inflation (and how long until power and oil costs are taken out of the calculations?), the impact is not as great as it might be.
France is in a similar position, in that 80% of it electricity is generated by nuclear power, but benefits from having less of a commuter mentality. Apart from Paris, which is different to the rest of France on so many levels, the average French worker assumes that they will be able to go home for lunch if they want.
In sectors where working away from the business base is required, construction for example, the assumption is that you will get an allowance close to 10 Euros for a nice leisurely lunch. This is why you can get an excellent four course lunch with wine and coffee, though often limited choice, across rural France for about 10 Euros a head.
Because the French don't have any oil reserves themselves, and closed their coal industry about 10 years ago, they have had to import for a while, so mains gas is more limited and options like geothermal heating, heat exchangers in wells and rivers, and site specific gas and paraffin heaters are commonplace. They also take more interest in insulation technology than the UK, and all houses being sold now have to have an energy consumption report before being put on the market.
But future scenarios are still scary - what if the US goes to war with Iran, what if the dollar regains its strength, what if Venezuela decides to stop selling oil for a couple of months (well it has had a financial bonanza recently, so why not?)? How will our Western, oil-based economies cope?
My tongue in cheek predictions about this scenario!
The UK will blame it all on Labour, find the responsible civil servant, sack him and then take on a big four consultancy to find a way out of the crisis (the consultancy will offer a role to the sacked civil servant on three times his original salary).
The French will go on strike.
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