Oil And Gas Flashcards
The international energy agency estimates that
A carbon price of $200-$250 per ton would be needed to achieve net 0 by2050
Higher energy places have contributed to
The rise and interest rates which financing course for renewable project
Describe the impact of high energy prices on the Uk
increased cost of producing raw materials may have to be absorbed by the firm reducing profits/passed onto the consumer increasing price (1)
• inflationary pressures may lead the central bank to raise interest rates (1).
• energy price rises are likely to hit lower income households disproportionately (1), as they spend a higher proportion of their income on utility bills and are more likely to be in fuel poverty (1). This had led some to argue that families are facing a ‘heat or eat’ dilemma (1)
• business costs may increase which will lead to less profitability/business failure (1). This could lead to lower levels of investment (1)
• energy companies can make abnormal profits (1) and this can lead to either greater investments in renewable energy (1), or calls for the government to enact windfall taxes on these producers (1)
• some energy retailers may not be able to absorb the increased cost and may go out of business (1), which would lead to higher concentration in the energy retail market (1)
• in the long term, higher fossil fuel energy prices may encourage consumers to find alternatives (1) and this may accelerate the move towards a greener economy (1)
Analyse the possible measures which the UK govt could apply to reduce the negative impact of high energy prices
Ofgem can introduce an energy price cap which would set the maximum price that a household would pay for their energy use (1)
• the government could increase the payment given for the Alternative Fuel Payment to encourage households to use alternative fuels (1). This scheme currently delivers a one-off payment of £100 to UK households who are not on the mains gas grid and therefore use alternative fuels to heat their homes (1)
• the government could open up a new licensing round to allow oil and gas companies to explore for fossil fuels in the North Sea (1). This would give the UK more energy security and possibly lead to less volatility in energy prices in the long term (1). However, there are environmental concerns regarding this policy (1)
• the government could allow hydraulic fracturing (fracking) which would recover gas and oil from shale rock (1). However, there have been concerns that fracking causes earth tremors, which could lead to house prices falling in value in areas where fracking takes place (1). There are fears that fracking releases poisons into the water supply (1)
• the government could provide grants for households to insulate their homes which would lead to lower energy consumption (1)
