England’s Office of Gas and Electricity Markets has just approved a 20% increase in rates, increasing household expenditures on this item to around £1,000 per year.
England’s Office of Gas and Electricity Markets has just approved a 20% increase in rates, increasing household expenditures on this item to around £1,000 per year. Average consumption in that country-and in most Western European countries-varies from 100 to 200 gigajoules per person/country/year/, a gigajoule corresponding to the energy generated by 30 liters of gasoline. In the Netherlands and Scandinavia this consumption index reaches two to three hundred, while in Poland, the Baltic countries, and Portugal it is within the 0 to 100 range. The world’s average consumption is 59GJ.
In England, both services are private and the hike approved by the government is unbearable to many pensioners and low-income families, for these past years’ inflation and pay raises seldom exceeded 1%. Today England’s cost of living is one of the highest in Europe while its relatively cheap work force, weakened by flexible labor legislation, becomes the “Working Poor”. Unlike the welfare state times, having a job today is no guarantee of sufficient income to live well, but just of enough for really basic needs.
Raising rates for such services has become increasingly common, and in some other European countries, as in Holland, the price of services has risen by more than 50% over the past 3 years. The privatization of basic public services, such as power, gas, and water, in the industrialized countries of the northern hemisphere have produced a new paradigm in terms of the cost of living for its citizens and characterize yet another attack against the welfare state, particularly in Europe.
Higher housing and public services costs, compounded by smaller public budgets for social subsidies, are generating a new form of social exclusion by forcing poorer families to choose between heating their homes and eating adequately in countries where, for climatic reasons, demand for energy is high.
The energy issue has sparked other debates in the European Union. A German private energy company, E.ON, announced its interest in acquiring same sector’s Spanish Endesa. Italian Enel was considering a bid for Suez Lyonnaise des Eaux because the latter controls an electricity utility in Belgium, Electrabel. Reactions by the Spanish and French governments were, respectively, to stimulate mergers between Endesa and Gás Natural, and between Suez Lyonnaise and state-owned Gaz de France.
According to European neo-liberal political parties, the option for stimulating the consolidation of strong national companies represents the return to “old European nationalism” at a time the market should be further liberalized to allow the constitution of companies with higher outputs and marketing scales within Europe, which would thus be capable of offering lower prices to consumers. What they omit is that in this sector competition is limited and that the economy of scale actually represents the formation of private oligopolies with even more power than they have today to impose prices at their will. (Read more in Energy Policy in Europe: Nationalism Is Alive and Well)
And what’s more, the ongoing occupation of Iraq and the uncertainties brought about by the policy carried out by the US and its European conservative allies in relation to the Middle East are crucial factors in keeping oil and gas prices high, as well as the weight such commodities have in Europe’s energy supply model. Further liberalization will benefit neither peace nor welfare state.