Thursday, January 05, 2006

What Can We Learn From the Winter Fuel Crisis of 1946/47?

The winter of 1946/47 was a particularly severe one, the worst since 1880. Had it not been so severe supply of coal to the UK’s power stations and industry would have been tight, but no-where near as tight as it was. The wintry weather increased demand for electricity and coal for heating, decreased the productiveness of the pits, and made difficult the transportation of coal from the pits to the factories and power stations. In the 1940’s coal was used for almost the same purposes as gas is today: electricity generation, chemical processes and domestic heating (both in fires and through electricity).

The are a great many similarities between the build up to the 1947 coal crisis and the build up to this winter; from the warnings of industry and experts going back as far as the preceding summer, the concerning storage deficit going into the winter months and the lower than predicted raw-material output, the use of coal in 1947 and gas in 2006 for heating and electricity generation and industrial processes, to government’s blithe assurances that everything was going to be OK.

It would be incorrect, however, to hold up the example of 1947 and try to draw some lessons from it without noting some massive differences between that winter’s coal industry and this winter’s gas industry. Two major differences are that: today the UK is reliant upon imports of gas from the continent, whereas in 1946 the government attempted to import skilled miners from Poland; and on the 1st January 1947 the coal industry was nationalised, creating a wildly different set of market conditions to Britain’s liberalised gas market, there was no price mechanism to help reduce demand and government had considerable power at its fingertips to cut off supplies to certain industries.

Throughout the summer of 1946 a wide range of sources, including some within government, had warned over a potential coal shortage during the following winter. Predicting whether the winter would be difficult or not was a tricky business, as one would have to include in one’s prediction factors as diverse as: the rate of coal extraction and the ability to import coal if needs be; total coal demand and how that demand was split between domestic, government and industrial users; and the weather. Previous winters had been difficult due to poor supply, and following the war demand was increasing rapidly. On the 24th October 1946, however, the Minister for Fuel and Power, Emanuel Shinwell, said in a speech that:

“Every one knows that there is going to be a serious crisis in the coal industry, except the Minister of Fuel and Power, I want to tell you there is not going to be a crisis in coal, if, by crisis, you mean that industrial organisation is going to be seriously dislocated and that hundreds of factories are going to be closed down.”

These reassuring words were based on poor assumptions about the weather and how much coal could be mined. Events transpired to punish Britain for these optimistic assumptions.

On the 4th December, after it became clear that supply of coal was not meeting demand as he had expected it to in October; Shinwell wrote a letter to industry asking for a 5% reduction in coal use that he predicted would make sure Britain faced no crisis. This is the final paragraph:

“If, as the Government hope, industrial consumers (other than the industries which will be totally exempted) at once curtail their consumption by five per cent., the consequent improvement in the stock position, assisted by the reduction in the consumption of coal by electricity undertakings and gas works, should suffice to enable industry as a whole to get through this winter without any serious interruption in activity.”

By February 1947, however, the really cold weather and snowy conditions hit, and coal deliveries to ‘non essential’ industries dropped right down, and industries started to close down, amongst them Austin’s Longbridge plant. This is taken from The Times of the 3rd of February 1947:

“Announcing that the Austin Motor Company’s Longbridge factory at Birmingham, which employs 17,000, will close tonight because it has only two working days’ supply of fuel, M. L. P. Lord (chairman and managing director) on Saturday said that they were faced with the alternative of working one in 10 working days or one full-week in every 10.”

On the 10th of February 1947 Emanuel Shinwell announced that there wasn’t even enough coal for the power stations: power cuts to most of industry and some domestic customers were enforced. Members of the public were asked to stop their power usage wherever possible. Such restrictions continued for the rest of the month. By the 17th February 2 million factory workers were idle due to lack of coal. This is taken from The Times of the 10th of February 1947 under the headline “Unemployment for Several Millions”:

“The drastic cutting off of electricity to industry began at midnight, and it is feared that several million workers will be idle. Except for essential services, no electricity is being supplied to industry over wide areas. Domestic customers will be without electricity between 9a.m. and noon and 2 p.m. and 4p.m. to-day”

With hindsight it is clear that had the government taken more dramatic steps in October and November to in order to reduce demand the stockpiles of coal could have been built up to provide for February. In the event the government were afraid of frightening people and did there level best to reassure the public, even though that meant using optimistic predictions. Predictions should always provide a set of scenarios across a range of factors, including potentially damaging ones, and take account of factors not performing as predicted.

In the future they may look back at the speeches of this Labour government and have similar thoughts. Do you remember the Minster for Energy, Malcolm Wicks, saying that the UK was ‘Awash with Gas’, despite warnings about the tightness of supply? As each day passes, however, a gas crisis in 2006 becomes less and less likely: although that depends upon the weather. Though the winter has been cold so far, it hasn’t been really cold. Though Beach, Interconnnector and to some extend LNG have all performed below the level expected of them in the National Grid’s Winter Outlook Report, they haven’t underperformed really badly.

We must, however, ask the government why they have failed to take demand reduction measures during October, November and December 2005. Demand reduction measures vary in their impact upon the economy and upon people’s lives. Public appeals for people to check their heating carefully would have little or no effect on the economy or on the public, but would make the government look a bit silly having to admit that they have made a miscalculation and that there are dangers ahead.

Shutting down industry is one form of demand reduction used in the 40’s. Had the government been more open about the dangers facing the UK in this winter in 2005 there would be no chance of such industry shut downs in February 2006. As it is there is still a slim chance that we will see dramatic shortages in a month’s time.

Our government is not mature enough to admit when things are getting tight, and we can assume that their plan has been to sit by and hope that the winter isn’t too cold and beach supplies don’t dwindle too rapidly. Let us hope that British business will not have to pay for their gamble.


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