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Taoiseach: These high energy prices are here to stay – but blame Russia

It’s important to say something here straight up: This is garbage.

Taoiseach Micheál Martin has warned Irish consumers of a “new era” of high energy prices because of Russia’s war on Ukraine.

Hailing the deal reached by EU leaders last night to ban imports of two thirds of Russian oil, the Taoiseach has described a “watershed” moment which will force Ireland to accelerate offshore wind energy.

Arriving at the second day of an EU summit in Brussels, Mr Martin warned of “rocky territory” in the coming years when it comes to high energy prices.

It is, undoubtedly, true that Russia’s invasion of Ukraine has jacked up energy prices due to the effect of sanctions on the Russian Federation. But that’s not the long term cause of energy price rises. Don’t believe me? Here’s the graph of oil prices over the past two years:

Note well two extreme events: The beginning of the pandemic in early 2020 caused a sudden massive drop in the price of oil, because traders wrongly assumed an almost total global shutdown reducing the demand for fuel. That was actually a bigger shock, percentage wise, than the increase in February this year, following the Russian invasion. Prices are actually lower today than they were when Russian tanks crossed the border.

Outside of those two events, though, the trend is clear: Prices have been rising steadily for the last two years.

Not coincidentally, almost every western Government has a state policy of gradually increasing the price of fossil fuels. This is because the alternatives to fossil fuels, like wind, are unreliable and expensive. The best way to make them competitive with oil and gas is to heavily subsidise them – as Ireland does – and to make fossil fuels more expensive, thus making “green” energy relatively cheaper.

Add to that a raft of measure to “keep it in the ground” – drilling and fracking bans and so on, which are in place right across Europe, and you have active state policies to drive up the price of oil. To blame this all on the Russians (who deserve blame for a lot of other things, by the way) is just cheap dishonesty and rhetoric.

It is an open question as to how many Irish people realise that expensive oil is actually the state policy of the Irish Government. The Government itself, after all, never directly trumpets that, because to do so would be unpopular. Instead it talks about things like a “just transition” and “investing in clean energy”. But of course, a just transition cannot happen if oil is cheaper than the alternatives. So the price of oil must rise.

In that cause, we have increased the taxes on fuels, and brought in a carbon tax, and taken measures (like the blocking of the Shannon LNG terminal) to restrict the supply of traditional fuels.

As to the impact of the Russian war, all it does is accelerate a trend. And it’s also questionable as to how badly the policy actually hurts the Russians. This writer is all in favour of economically hurting the Russians, but, let’s face it: They actually benefit from higher global prices because they can still sell the stuff to megacountries like China and India, who haven’t joined the sanctions against them. We’re hurting EU consumers here. It’s an open question as to how much pain we are actually inflicting on Gazprom.

It’s important to note, finally, that this is all a democratic choice. The Irish Government isn’t doing anything illegitimate here. Sneaky, perhaps, but nothing that wasn’t voted for. This kind of dumb energy crisis strategy was laid out in the Fianna Fail and Fine Gael and Green Manifestos. If they have a mandate for anything, it’s this kind of thing.

So, when you fill your tank tomorrow and pay, as I did, the other day, a hundred quid for the privilege, don’t, at least, curse the Russians. They’re not to blame for this one.

Blame yourself. Statistically, there’s a very good chance that you voted for it.

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