How To Prepare For The World Energy Crisis
The world is facing the worst energy crisis in history. Experts have said that the rising costs will plunge over half of households into fuel poverty this winter.
Completely out of tools the help the most vulnerable for whom this is a catastrophic unaffordable price rise that will leave some dying. Sky-high gas prices is raising new questions about America’s overall energy policy.
The worst energy crisis since 1973 is a strong possibility. One campaign group are calling for people to stop paying their energy bills altogether.
This financial time bomb will be bigger than the pandemic. If we don’t find an answer to soaring energy bills, it could trigger a full-scale humanitarian crisis.
The latest predictions I’m gonna be sharing with you today are frightening. Shockingly, 75% of middle-class households are saying their income is falling below the cost of living.
I’m gonna be real with you. Lives are at risk. Many people are gonna have to choose between starving and freezing.
As Europe is at the epicenter of this worldwide crisis, I feel like it’s my duty to explain what’s happening, why it’s getting out of hand, and how you can best prepare for the coming storm.
So energy prices have been increasing over the last year. However, we’ve just gone from bad to catastrophic. In October, energy bills are expected to rise by 80%. This is already after a 54% increase in April.
To put this into context, this means the average yearly household energy costs are expected to exceed $4,157 or 3,549 pounds.
We know this, as, every six months, the regulation company, Ofgem, sets a price cap for people on a standard variable tariff, which most people are on.
This doesn’t mean the price is the same for everyone because the cap is based on units of energy used.
My house is a lot bigger than the average, and it used to cost me 250 pound per month, and now it’s a staggering 560 pound per month, which is 6,720 pound per year.
That’s nearly $8,000 just for essential energy. Unfortunately, it’s projected to get worse before it gets any better. In January 2023, there is likely to be another 51% increase.
About half of national households could fall into fuel poverty by the start of next year. That’s when a household spends more than 10% of their disposable income just on energy.
This will cause people to have to make the choice between heating or eating, as everything is rising at breakneck speed. These figures are, of course, more UK-focused.
However, this is truly a worldwide issue. Europe’s natural gas prices have surged by 400% in the last year. This is driving up household bills and causing the failure of multiple energy companies.
This disaster is now spilling into American markets, as natural gas prices are up 150% this year. This has even forced 44% of drivers to only fill their tanks halfway, even though they know they will need to refill soon.
This suggests that everyday people are struggling more than ever with cash flow. To paint an even bigger picture, the United States, China, and Brazil are facing higher-than-average prices for gas, including oil, which is now at its highest level in seven years.
Entrepreneurs are also being hit hard. From October, Timothy Taylor’s, a regional brewery, faces a five-times increase in energy prices, from 200K per year to more than a million.
Just think about it. That could be going into employee pockets in the form of pay rises. Now you mention it, at least wages are increasing on the whole, right?
Well, on the surface, wages did go up by 4.7%. However, as inflation’s at 9.4% in the UK, this means real wages have actually fallen by 3%, the biggest drop in two decades.
My most hated enemy, unpaid credit card debt, is also due to rise. Consumer debt is very bad for the economy, as people have less disposable income to spend on products and services, driving down the profits of business, and therefore also having an impact on the stock market and investors.
Dangerous buy now, pay later services are also exploding in popularity,
which lock people into extremely high interest rates if they miss their payment targets.
But that’s not the worst part. Once people’s mortgages start expiring, they’ll have to pass new affordability checks, and therefore due to the rise in cost of living, have to go on an even higher interest rate.
Yeah, that’s right. People that can’t afford their mortgages will actually have to pay more because they’re higher risk. Crazy, right?
The most disgusting thing of all is that energy wholesalers are laughing away while making record profits, but I’ll get into that a little bit later.
This is no joke. Thousands of people could die due to cold homes, and they’re not being given the help they need. Yes, governments have granted some help in the form of credit.
However, that help was based on old price hike predictions, and now that’s not even a drop in the bucket. Much more is needed to make a real impact.
I mean at this rate, people won’t even be able to make themselves a cup of coffee over their extreme fear of debt. But why is this international crisis occurring?
Well, it’s due to a combination of factors, so let’s talk about those and how you can best prepare for the coming winter.
The system is more complicated than you may first realize, and the culprits of these crazy price increases aren’t the day-to-day companies you deal with.
By unpacking the mystery behind rising energy prices, we will then better understand how to fight them. The Ofgem price cap is created by an algorithm that takes into account the wholesale price of energy.
Now, the companies that we know as energy providers aren’t actually the people creating the energy. They’re effectively middle men. Think of them like a corner shop that buys items from a wholesaler, then sells them on to you at a small profit.
These profits are highly regulated. However, the wholesalers aren’t. So the energy retailers are actually getting screwed, as well. The price they’re buying energy at just keeps increasing, and so do the energy producers’ profits.
The issue is there’s hardly any competition when it comes to mass energy generation, and therefore this limited market means wholesalers can charge whatever they want, and they’re getting away with it.
In addition to this, there is also less energy available due to Russia invading Ukraine, as before the war, Russia supplied 40% of Europe’s natural gas.
A major Russian pipeline called Nord Stream 1 is set to have unexpected maintenance at the end of August. This pipeline delivers gas to Germany and Europe.
It’s being seen as a power play to stop us supporting Ukraine. You may think that’s all right, as you heat your home and cook using electric.
However, natural gas is used to generate electricity, so everything is underlined by the gas wholesale price. Asia and Europe also used a lot of gas stockpiles last winter, leading to far less reserves to supply the demand.
This means the EU is now competing on the global market, which is pushing prices up worldwide, including the USA. The winners over all of this are the energy producers.
I mean Devon Energy and ConocoPhillips are up 22% in just the last month. The USA doesn’t seem to be doing much to help at all. Quite the opposite, really, as they’ve actually banned all imports from Russia, therefore driving up prices further.
Biden has even said that defending freedom is going to cost. In some German cities, people will have to have cold showers after going to the local swimming pool, and Berlin is switching off the illumination lights of 200 of its major tourist landmarks.
France is also taking action, as their government has announced plans to cap the rising energy bills to 4%. EDF, a state-owned energy producer, is being forced to sell electricity generated by its nuclear reactors to rival home supplies at well below market prices.
One of the UK’s biggest energy companies, Simple Power, has actually called on the government to freeze customer bills for two years.
This would cost the government $118 billion, more than it spent paying millions of people salaries during the pandemic. This help would come at the cost of general taxation over the next decade and mass-scale government borrowing.
Politicians need to understand the public unrest that’s growing. Even in the UK, I’ve seen a movement pop up called Don’t Pay UK, and to be honest, I can completely see where people are coming from.
Their aim is to get one million people to stop paying their energy bills. However, as we’ve discussed, they’re actually boycotting the wrong companies.
The energy retailers that they’re pledging not to pay are making minimal profits as it is, but the people feel like they have to do something, as the prices are just becoming unbearable.
Not paying is a bad move, ’cause this could lead to a million people being cut off from their electricity, and many falling further into debt.
Well, that’s if they’re even allowed to take on more debt after destroying their credit score by not paying their bills. Stealing energy isn’t the answer.
It’s clear energy producers have got everyone by the balls, so what can we actually do to prepare? Well, you have two ways to pay when it comes to your energy bills, receipt of bills and direct debit.
Direct debit is the cheapest, as the price cap is lower. However, you can end up overpaying it, and then they hold your money as a credit. This is bad for cash flow, as you’re paying money out that you don’t even owe yet.
The energy companies also love this, as they can use your money to make more money. British Gas have just announced a 25 million-pound customer support package.
This is because, if you’re struggling to pay your bills and you reach out to them, they’re legally required to help you with a variety of different services, such as payment plans and reduced bills.
It’s always worth calling your energy provider to see what they can do for you. If you’re offered a year’s fix and no more than 145% above your current price cap tariff, it’s worth considering if you want to be certain of your expenses.
It goes without saying that you should try and cut your usage down, turning things off when you’re not using them, and maybe put a jumper on instead of turning up the heating.
But we shouldn’t have to do this, as we’re not in the 1900s anymore. The government needs to step in and take some serious action. More money needs to be given to support households.
This money needs to be taken directly from bills so that it’s used in the correct places. Regulation of the energy producers is long overdue. Yes, I understand that the price of energy production has increased, but they are still making record profits at the expense of extorting everyday people.
If we think back to the pandemic, one thing has become very clear. The rich became richer. I’m personally increasing my allocation to renewable energy stocks, as the market is being driven by government policy and climate-conscious consumers hoping to transition into a greener, sustainable future.
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