Saturday, December 24, 2005

What can the government do?

At the time of writing there is a substantial agreement between weather forecasters that we will see a reasonable amount of snow on Great Britain (mainly South/South East/East) from Tues/Weds onwards.

The GFS (Global Forecast System) ensembles predict temperature coming back to average after that. This is, however, too far out for reliable predictions. If the cold weather remains into January then the Gas system will be under strain as industry starts up again.

None of this is necessarily "news" save that it it looks more likely that what has been predicted as possible is actually going to happen.

The government's response is to write to the European Commission - probably Peter Mandelson.

The big question, of course, is what the government could have done.
  1. Firstly, it would be possible to encourage imports from Europe. Ofgem could act to do this. This involves insuring transport risk against the whole market.
  2. Secondly, a premium could be placed via market regulation on importing gas into storage under certain defined circumstances.
  3. Thirdly, a public information campaign could be run to reduce gas usage in commercial environments by turning down thermostats.

At the moment for many people there already is a gas crisis as they are likely to lose their jobs. However, if the government were to face reality and the urgency of the situation then they would act. This is one of those situations where it is all about handling contingencies. It could be that the weather will turn nice and mild and there will not be a problem. On the other hand it could be that the snow stays on the ground and we have a need for urgent crisis action.

The reason why the government have failed the UK is that they have not acted to reduce the risk of problems and they have not acted to minimise the severity of any outcome.

There remain things that can be done, but it is all getting a bit too late now. A million cubic metres of gas (mcm) is a lot of gas. Shifting it around takes quite a bit of doing. I personally think this is one of the biggest failings of the Blair Government as it is quite clear what the problem is, but they are essentially ignoring it.


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