Empower Your Business to Manage Your Pipeline in United Kingdom

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this is a story about power the power to light and heat your home cook your food turn on your TV it's a story about how that power is generated and transported through thousands of kilometers of cable to the sockets in your walls but it's also a story of a different kind of power political power economic power Market power at its heart this is a story about how something as essential to human life as energy has been transformed into just another way for private companies to make money and how the merciless profiteering that transformation has enabled has left a whole country in the cult this is the story of how energy privatization bankrupted Britain greetings from the UK where things are kind of just increasingly terrible actually which maybe sounds like hyperbole but let me show you a video this is a clip from a British TV show called The Martin Lewis money show folks in the UK will be more than familiar with Martin Lewis but for the benefit of international viewers Lewis is a media personality best known for sharing tips and tricks to save money alongside his TV work he runs a website called moneysavingexpert.com which maintains up-to-date lists of all the best bank accounts credit cards and insurance deals as well as providing pointers on state benefits tax and how to get out of debt Martin Lewis isn't perfect but in the often murky world of financial advice he's definitely one of the good ones all guidance and zero grift which means that the bits of advice that he's sharing at any given moment in time can act as a beautiful barometer for the state of the British economy if you use the way back machine to browse money-saving expert as it appeared back in the petty pre-financial crisis days of 2007 for example you'll find tips on how to get free gifts by switching credit cards cheap package holidays and interest rates of over six percent on your savings so let's see what kind of advice Martin Lewis has been giving out lately shall we now this is a big one take my one degree challenge the World Health Organization says 18 degrees is fine for healthy adults younger older or ill you might need more who's got their thermostat on 18 degrees or less anyone in here for anyone who didn't catch it that's Martin Lewis updating Brits on how cold we can let our houses get before the World Health Organization says it becomes a risk to our health so yeah things in Britain right now are not fantastic in fact to a lot of people setting the thermostat to 18 degrees likely sounds like an opulent luxury see in November inflation in the UK hit a 41-year high of 11.1 this means that everything from cans of beans to boxes of Space Marines had gotten on average 11.1 percent more expensive over the previous 12 months and while prices have risen across the board the worst culprit has been energy bills just three years ago the typical UK household paid 450 pounds a year to cook their food power their lights and keep themselves warm in 2022 that figure Rose to 2 500 pounds which is money that a lot of people just don't have of course Energy prices have been rising across the globe Russia's invasion of Ukraine led to a historic surge in the cost of gas and oil which has swiftly been passed on to customers during 2022 Energy prices in the U.S Rose 14.1 percent across the 19 countries that use the euro that figure was 34.9 percent but few countries came close to the UK which saw energy bills jump a further 90 in just one year makes you proud to be British there are several factors which have allowed things to get so bad in the UK all of which long predate this particular crisis and there's one thread which ties them all together privatization where most countries have some degree of private involvement in the energy sector few have gone as far as the UK in opening up the entire system to companies whose primary concern is the extraction of profit in today's video then we're gonna look at how energy privatization has left many Brits unable to heat their homes and in order to do so we need to begin by turning our clocks back to 1986 and reacquainting ourselves with the princess of privatization herself the diva of deregulation the noble woman of neoliberalism my friend and yours Margaret Thatcher [Music] slimy they keep going this way we'll be staring down the barrel of the one pound pint all right so the story of energy privatization in the UK begins with another TV clip now if you're watching this video from outside the UK or if you're under the age of 40 or maybe even both this weird little advert probably means nothing at all to you but to a certain generation of Brits the catchphrase if you see Sid tell him is Iconic the ad is part of a marketing campaign produced and publicized the privatization of British gas until this point British gas had been a publicly owned Corporation responsible for supplying gas to any home or business in Great Britain which required it you know a lesser Creator would have put a fart joke in here in July 1986 however the UK government under the leadership of conservative prime minister Margaret Thatcher past legislation ordering its privatization and look I know gas isn't the most exciting thing in the world but this was a big deal in fact British gases flotation on the London Stock Exchange in December of that year was due to be the biggest initial public offering or IPO of any company ever oh it's just not very nice is it British gas wasn't the first publicly owned entity to be privatized during Thatcher's tenure the armed manufacturer of British Aerospace half of the phone service provider British Telecom and the luxury car manufacturer Jaguar had all been sold off to private investors in the preceding years it also wouldn't be the last British Airways and British steel along with the country's electricity Network buses and trains would all soon follow there were three main motivations behind this string of sell-offs the first was budgetry like all conservatives Thatcher was super keen on tax cuts for the rich over the course of her tenure the top marginal income tax rate in the UK was slashed from 83 to just 40 percent corporation tax that's the tax businesses pay on their profits was similarly discounted from 52 to just 34 selling off a public asset or two was in part her way of covering the cost of these handouts to the rich the second motivation was efficiency Thatcher and her allies believed that privately owned companies were just inherently more efficient than those owned by the state further in the case of Industries like gas and electricity privatization opened the door to the introduction of competition rather than a single state-owned gas or electricity supplier simply telling you how much your energy bills would be multiple companies would be forced to compete for your business which so the theory went would lead to lower prices we'll come back to that one shall we the third motivation for Thatcher's privatizations was purely ideological she later wrote in her memoirs that privatization was fundamental to improving Britain's economic performance but for me it was also far more than that it was one of the central memes of reversing the corrosive and corrupting effects of socialism others might have felt that it made sense for essential services such as energy water and telecoms to be overseen by the government this stuff is all pretty important after all but to Thatcher and her allies the existence of publicly owned utility providers was basically three steps away from opening up a gulag in the case of British gas Thatcher's desire to inoculate the UK against socialism was further by the particular approach that was taken to the sell-off rather than letting the company be gobbled up by institutional investors the government set aside 40 of shares for individual members of the public any Brit who was interested could apply to buy a minimum of 100 shares for one pound 35. five a day the goal was to promote in Britain a culture of what Thatcher's Finance Minister Nigel Lawson described as popular capitalism The Hope was that if more work in class Brits could be encouraged to buy stocks and shares then they feel they had more of a stake in capitalism as an economic system and therefore be less likely to vote for left-wing parties why can't we have nice drinks but in Practical glasses that's all I want that's all I want in my life the privatization of British gas was seen as a way of catalyzing this culture shift the Thatcher government poured 32 million pounds into the so-called tell Sid ad Campaign which became impossible to ignore as one journalist put it you couldn't pass a billboard switch on the radio or glance at your junk mail and miss it and the campaign was a resounding success 4.5 million Brits applied to buy shares in British gas and when sold it had the largest number of shareholders of any company in the world almost 40 years later few who bought shares in British gas will have any complaints by the end of the first day of trading the value of each share had already jumped nine percent by 2013 it's estimated that those shares would have been worth almost 20 times what they were initially bought for which you know it's just nice to see some Boomers get a win isn't it but this video isn't about the impact of energy privatization on those who bought shares it's about the impact on the country as a whole and the millions more Brits who rely on British gas and its younger Rivals for warmth hot food and energy because following the privatization of the UK's electricity Network a few years later the entire UK energy sector has been in private hands it's impossible to evaluate the impact of privatization on consumers however without first having a basic understanding of how the energy Supply industry Works how it was governed before privatization and how that changed when the industry was sold off you keep getting Drank in My mustache [Music] [Music] good morning It's Magic I didn't know how that's working ah now the logistics of the energy Supply industry are broadly the same worldwide but given that this video is about the UK I feel like it's only right that we should conjure up a suitably British scenario to ground ourselves in so it's Wednesday and you've just been rudely awakened by the dustman if you've got a couple of hours left until your shift starts at the sarcasm Factory until you give an understated nod to your portrait of Mr Blobby and head downstairs to make yourself a nutritious breakfast of beans on toast but where does the electricity required to power your toaster and the gas required to fuel your hob come from well the steps involved in both are threefold the first step in getting electricity to your house is Generation this is the sub-sector of the energy Supply industry which creates electricity in the first place the UK generates electricity from a whole range of sources coal gas nuclear wind Hydro solar hopefully soon we'll be able to harness the power of the Tabloid presses unending rage at anyone under the age of 30 doing well better thing the electricity produced is exactly the same whatever the source but unless you can get it to your kitchen then you're gonna have to eat your toast Raw The Next Step then is what's called transmission transmission is the process of conveying electricity over large distances usually the length and breadth of a country if you've ever seen proper beefy steel electricity pylons like these then you've probably been looking at part of your country's transmission Network in the UK this is often referred to as the National Grid now to stop too much energy being lost to heat and resistance along the way electricity is transmitted at extremely high voltages the flip side of this is that it's too high voltage for domestic use if you hooked your toaster directly up to a transmission pylon then your toast would probably be a bit crispy and you'd probably be a little bit dead before it reaches your house then electricity has to pass through a final stage of supply distribution from the high voltage transmission Network electricity is delivered to substations across the country where it is stepped down to a lower safer voltage for local distribution if you've seen smaller wooden pylons like these out in the countryside then you've probably been looking at part of a local distribution Network it's this distribution Network which does the final task of delivering electricity to all the poems and offices and unaccountably large number of vape shops in your local area Okay so the electricity has reached your house and you've plunged your bread into the glowing crevices of your toaster but what about your beans well the gas supply network actually works pretty similarly the first step here is production because the gas has to come from somewhere right and no there will still be no fart jokes in this video around half of all gas used in the UK is extracted domestically from reservoirs beneath the North Sea a further third is imported via pipeline from Norway and the remainder arrives in liquefied form by boat from countries including Qatar Russia and the US in being delivered to your house gas also passes through a transmission Network and a distribution Network the difference here however is not voltage but pressure transmission networks pump gas across huge distances which requires them to operate at extremely high pressures from the high pressure transmission Network gas is then delivered to pressure reduction stations across the country which is transferred to the much smaller lower pressure pipes which make up the distribution Network and as with electricity it's this distribution Network which delivers the gas to your house and enables you to bring those big beautiful beans to the boil turn up [Music] course I just got to the point of this video the gas and electricity which make your beans on toast so well toasty are not free operating alongside both of these Technical Systems then is the retail part of the industry which is slightly confusingly often referred to as Supply the supply is more shirts and ties than boiler suits and hard hats it's the part of the process in which someone looks over how much gas and electricity you've used in the past month and asked you to send over some cash to cover the cost now as I've mentioned these divisions between generation transmission distribution and Supply are pretty much the same world wide although obviously the electricity hums with the appropriate accent in each country [Music] more importantly these sectors can be owned and managed in many many different ways prior to privatization the management of these systems in Britain was remarkably simple everything gas related across the whole country was operated by British gas they dealt with everything from maintaining pipelines to selling cookers to answering the phone if you thought you'd been overcharged electricity was a bit different for one Scotland had its own Unique Systems separate from that of England and Wales in fact in order to keep things simple we're going to largely ignore Scotland during the course of this video which I'm sure any Scots in the audience will take extremely well all life must be so hard with your iron brew and your free prescriptions in England and Wales the industry was essentially split in two all generation facilities as well as the operation of the high voltage transmission network with the responsibility of a body called the central electricity generating board or kaguba everything Downstream of that was run by a group of 12 area electricity boards these each operated the distribution Network for a given region and handled billing for anyone living within their patch for an average beans on toast enjoyer like you this was a pretty good deal all you had to do was pay up at the end of the month that Simplicity also meant cost Effectiveness in the 10 years prior to privatization the price of electricity had been decreasing in real terms but what use is simple when it's not creating any shareholder value when British gas was sold off in 1986 things initially remained pretty similar the entire Corporation was sold off as a single company on top of this investors were promised a grace period of 25 years in which British gas would remain the only company authorized to sell gas to British homes when it came to selling the electricity industry four years later however the Tories picked the whole thing up by the Scruff of the neck and chucked it head first into a woodchilla metaphorically of course the most significant change was the breakup of the cgb ah not kakaba the board's generation activities were divided between three newly minted companies National Power Power gen and nuclear electric it's real kind of like pretend video game company Vibes the running of the transmission Network or National Grid was given over to a further company the even more imaginatively named National Grid company the 12 area electricity boards were each privatized as separate businesses each retained its dual responsibility for both operating its local distribution Network and acting as the retail supplier to homes within their area like British gas these companies were also given a grace period during which they would remain the sole electricity supplier for homes within their region after which they would be free to compete with one another and any new company he's entering the market to woo customers across the country as I've mentioned the argument given for this restructuring was that this new privatized system would force everyone involved in the energy Supply industry to be more competitive more efficient more ruthless in their dealings with one another and that this would in turn lead to cheaper beans on toast for everyone at least the cooking bit but it didn't take a long at all before the pursuit of short-term profits and increases in stock prices began to encourage not just profiteering but also some downright disastrous decision-making [Music] foreign you might be thinking that all this chat about the 1980s and 90s seems a little remote such a won get over it Tom but many of the structural vulnerabilities which have caused Energy prices to spike so significantly in Britain over the past year as a result of attempts at corporate penny pinching which took place in the very earliest days of privatization and they're all to do with how our electricity is generated when England and wales's existing power stations were sold off in 1991 the government also opened up the generation sector to full market-based competition in theory you could now ring around your mates put your spare change together and found your own electricity generation company in practice however you'll most certainly wouldn't have and not only because you just discovered this new thing called a Game Boy and we're too busy trying to save Princess Daisy from tatanga see at privatization the vast majority of England and wales's electricity generating capacity was handed over to just two companies National power controlled around 52 of the market whilst power gen accounted for 33 the sheer size of these companies made it seem nion impossible for any newcomers to compete more fundamentally power stations are super expensive take ages to build and are subject to ever-changing regulation you can put huge sums of money into building an Innovative new facility which generates electricity from children's screams but by the time it's complete a new government might have been elected which wants to phase out scream energy in favor of powering the city with children's laughter in short to get into the electricity generation game you've got to really really want it fortunately there was one group hanging around in the early 1990s For Whom the potential benefits of getting into generation did outweigh the costs and privatization the former area electricity boards had been rebranded as Regional electricity companies and for these rackheads National Power and power gens duopoly over generation was frustrating for a different reason the Recs needed to buy electricity to sell to their customers only having a choice between two vendors thus placed them on the back foot when it came to negotiating prices nevertheless a solution to this predicament would soon blow in on the wind in the form of natural gas the technology needed to generate electricity from natural gas had been around since the 1940s yet policy makers in the UK had tended to see it as a slightly unreliable energy source this was because unlike coal gas mostly had to be imported and the price of those Imports had a tendency to spike in instances where for example a war kicked off and a major gas exporting countries stopped well exporting gas nevertheless the business people were in charge now and while gas might not be a great choice in terms of energy security gas power stations are quick to build and cheap as hell you can build a gas-fired power station for less than a third of the cost of a coal-fired station with the same capacity and around a quarter of the cost of an equivalent nuclear facility in these low startup costs the regional electricity companies saw an opportunity to free themselves from their Alliance on the Legacy generators and they ran with it throwing up their own gas-fired power stations left right and Center in 1990 just 1.5 percent of the UK's electricity was generated from gas just five years later it was 18 percent by the end of the decade gas-fired power plants were generating 38 of all electricity generated in the UK this all had two main outcomes the first is that the UK is desperately reliant on gas even with the right of Renewables natural gas Remains the single biggest source of UK electricity by quite some way couple this with the fact that 86 of British homes also use gas for heating and you can begin to see why spiking gas prices have had such an acute effect on the UK yep it also led to a fusion of the generation and Supply sectors of the country's electricity industry one of the stated goals of privatization have been to break the industry up so that generators and suppliers would have to negotiate with one another as the regional electricity companies began to enter the generation game however that free market Vision began to fade in its place where a handful of extremely powerful generator suppliers with little motivation to reduce prices we'll come back to how the creation of these new energy giants has enabled rampant profiteering surely but first we need to take a brief look at a slightly different type of corporate Cash Cow in the form of transmission and distribution but before we go any further if you're a long-term viewer then you'll know that there's few things that I love more than a good bit of cultural analysis and the Creator whose insights have been most enthralling me over the past few weeks has been the legendary Anita sarkeesian in her new nebula original series that time when that time when invites us to take a fresh look at some of the key cultural events of the 20th century from the Hollywood Blacklist to the satanic Panic to gamergate each of the Nine episodes is a brilliant dissection of a particular cultural moment the series is fun slickly made and most importantly a genuinely excellent work of cultural history I thought I knew a fair bit about some of the topics that Anita places under her microscope but with each and every one I came away Having learned something new and with a slightly different perspective both on what happened and why that event still matters today that time when is just one of a whole number of brilliant original titles available on my streaming service nebula which is kindly sponsoring today's video every month we're adding more and more Early Access and exclusive content from your favorite creators and others who you 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so by using my personal link nebula.tv forward slash Tom Nicholas using that link allows you to get access to nebula for a discounted price of just 2.50 a month which is frankly a steal if you ask me further if you are kind enough to use that link you not only get access to all that exclusive content plus nebula classes it will also send a chunk of change my way to help me fund future videos like this one being part of nebula has been a real game changer for my work and really does make a huge difference in how ambitious I'm able to be with my videos so if you want to get access to all that great stuff while supporting my channel then you can head over to nebula.tv forward slash Tom Nicholas or if you will insist on sticking around here I guess we'll get on with the video [Music] as we've seen a focus on short-term profits over long-term strategy in the generation of electricity has caused some pretty big problems for the UK nevertheless the involvement of private companies in generation is a fairly widespread practice worldwide what marks Britain's energy industry out was a particularly radical experiment in privatization is the complete and total sell-off of its transmission and distribution Networks as things stand Britain is one of only two countries in Europe with a fully privatized transmission grid the other is Portugal which was forced to sell off its high voltage Network in the wake of the financial crisis when it comes to electricity distribution the UK is among a tiny handful of countries in the entire world to have a fully privatized system even in the United States the spiritual home free market capitalism nearly 50 percent of distribution networks are owned by local governments the reasons for this are twofold firstly ensuring that gas and electricity are getting to the places that they need to go are just super important her risk of sounding like I'm about to start some kind of liver King manfluencer Arc we're actually pretty reliant on these fuels a power outage doesn't just mean that your scalextric set stops working it could easily lead to a major humanitarian crisis and worse it might affect businesses allowing your electricity grid to be bore and sold by investors then is kinda sketchy in 2021 for example a chunk of Portugal's electricity transmission grid got bought by a manchio Ortega the founder of Zara and being what one corporate blog euphemistically called a cost optimization leader is one thing if you're running a clothes shop but it's quite another when you're getting a say in the running of a vital piece of national infrastructure to make matters worse Ortega is only the second largest shareholder in Portugal's transmission Network the largest is the state grid Corporation of China a company ultimately owned by the Chinese government now whatever your thoughts about China if you're a country then allowing another country's government to have any influencer all over your ability to turn the lights on seems our best not ideal the second reason the governments have tended to keep their transmission and distribution networks in-house is that these networks are what economists call Natural monopolies by this they mean that the practicalities of these sectors makes the introduction of open market-based competition all but impossible it would require having multiple networks of pipes and wires running alongside each other turning the country into a horrible wiry pipey mess even if that were allowed the cost of building an alternative gas or electricity Network would be so unthinkably huge that no company would want to in the first place all of this means that privatized transmission and distribution networks are right for profiteering without heavy regulation the companies which own them could demand huge sums for their use to this aspect the UK supposedly has a solution in the form of a government regulator called off jet part of gems role is to sit down with transmission and distribution companies and negotiate price controls the goal is for these price controls to enable each company to make just enough profit that they remain motivated to invest in maintaining their networks without making so much that it needlessly drives up bills now since privatization the UK's gas and electricity networks have each changed hands several times since 1995 National Grid the company has been entirely independent of the electricity suppliers and since 2002 has owned not only the electricity transmission grid but the gas transmission grid too distribution of both fuels is now also largely independent of the suppliers and run by a handful of specialist companies to their credit these companies are pretty good at their jobs power Cuts in the UK are extremely rare what they're even better at however is deploying small armies of lobbyists and lawyers to fight Regulators at every corner and ensure that they're able to leverage their Monopoly status to make outrageous profits in fact since privatization gas and electricity distribution have become the two most profitable Industries in the UK the average UK company makes a profit of between 9 and 15 depending on the industry in question as of this year however the figures for the Gas Distribution companies was 36.6 well the electricity distribution companies recorded average profit margins of 43.1 like for the avoidance of Doubt those are ridiculous numbers this has allowed these companies to make huge payouts to their shareholders between 2017 and 2022 the gas and electricity distribution Industries paid out more than 6 billion pounds in dividends in the same five-year period National Grid paid shareholders almost 9 billion these handouts to foreign investors such as BlackRock Mitsubishi and Warren Buffett are all ultimately paid for by ordinary Brits in their energy bills in fact if there's an argument to be had that privatization promotes efficiency then the example of Britain's transmission and distribution networks suggests that it's mostly a case of increasing the efficiency with which the super rich can extract money from the rest of us before we come to any two sweeping conclusions however let's complete our journey down the energy Supply Chain by examining the wild wild world of energy builds themselves foreign as I mentioned earlier one of the key motivations for privatizing the UK's energy sector was to enable the introduction of consumer Choice rather than simply being told how much their energy bills would be by their local gas and electricity boards the vision was the Brits would get to pick between many competing suppliers and that this would in turn Force those suppliers to reduce their prices this idea that competition leads to lower prices is textbook economics High School level stuff the problem is that the real world is very much not a textbook and for very different reasons both energy suppliers and their customers have remained almost impressively uninterested in embracing this new Creed of competition for their part energy suppliers have tended to look for somewhat less generous ways of gaining new customers initially this meant simply plotting to buy their competitors out when the industry was first privatized there were essentially 15 energy suppliers in the UK England and Wales has 12 Regional electricity companies two Scottish suppliers and British gas and for a Time the UK government retained what's called a golden ship in these companies which gave it veto power over any corporate takeovers in 1995 however the conservative government of John Major made the decision to relinquish this Last Vestige of public ownership What followed was like something from Battle Royale or the hunger Hunger Games Bob fortnite job Call of Duty Warzone or energy companies instantly began buying and merging and taking over one another when the just settled those 15 companies have been reduced to just six not exactly a victory for the expansion of choice that's the same number of friends and Friends unless you count like Gunther or someone maybe I should just have a friend's Channel of course this might not have been such a problem had privatization also led to a wave of new suppliers bursting onto the scene in 1998 the grace period in which the regional electricity companies were the only companies allowed to sell electricity within their designated region came to an end this at the same time is British gas lost its Nationwide Monopoly on the sale of gas the sale of energy to the public was now officially an open market the problem now playing customers see the theory that competition inevitably leads to lower prices assumes that consumers are constantly pumped at the idea of seeking out a good deal for many older people the idea of choosing your energy supplier made about as much sense as choosing your star sign which is ridiculous because we all know that they're personally assigned to us by Jesus others just have more important stuff going on jobs to go to clothes to wash beans on toast to eat when given the opportunity to choose their energy supplier then most brits's response wasn't to thank their lord and savior Milton Friedman for another expansion of the free market but to kind of just ignore it in fact in the 25 years since the introduction of competition the number of people switching energy suppliers in the UK has never totaled more than 20 percent of customers in a single year the result has been that the so-called big six energy suppliers have remained well large it took until 2015 for the collective market share of all non-big6 suppliers to cross 10 at time of recording the Legacy providers still serve more than 70 percent of British homes with the majority of the remaining 30 being served by just one younger competitor attempts to break the Stranglehold these companies have on the industry have kind of been more trouble than they're worth in 2014 off gem relaxed its regulations to make it easier for new smaller suppliers to enter the market this led to a wave of absolutely tiny retailers bursting onto the sea these companies were the polar opposite of the big six they were dinky operations with very few employees and had what can only be described as school project energy they pretty uniformly had stupid names worse websites and logos that were borderline crimes against graphic design the real problem though was that their business models were incredibly precarious the Legacy suppliers all owned their own power stations where they needed to buy gas or additional electricity they were large enough to negotiate predictable long-term contracts the newer smaller companies by contrast were forced to buy energy on the last minute spot Market which is not completely unlike eBay for energy which is a bit like the spot Market but for things when wholesale gas prices began to rise in mid-2021 then many of these smaller companies found themselves in a bit of a pickle they'd agreed to sell energy to customers at prices that were lower than they were able to buy it for and they began dropping like flies since the beginning of 2021 more than half of UK energy suppliers have gone bust of the 24 which remain it's estimated that over half of them are technically bankrupt already and Holding On by The Skin of Their Teeth this lack of meaningful competition has had a predictable effect on prices even before the recent increases in the wholesale cost of gas energy suppliers have been steadily ratcheting up prices outside of the global oil shops of the 1970s the average price of electricity consistently went down under nationalization adjusting for inflation the average Brit was paying 36 percent less to turn the lights on in 1990 than they were in 1946. far from driving down prices attempts to introduce competition to the market have actually reversed that trend between 1998 and 2019 the average domestic electricity rate increased in real terms by a whopping 80 percent following Russia's invasion of Ukraine and the subsequent spike in wholesale gas prices energy bills in the UK have risen even further at a ridiculous rate in 2020 the average annual UK Energy bill was around 450 pounds by 2022 it was 2 500 pounds and in 2023 it's expected to be a full three grand worse still these final couple of figures would be even higher were it not for the government's introduction of a price cap this will see the UK government hand over up to 140 billion pounds in subsidies to energy suppliers to ensure that ordinary Brits can turn the heating on far from Maggie Thatcher's dream of an energy industry in which the free market drives down prices then what we've ended up with is one in which the government is panding private companies cash by the bucket load so there is a lot of anger in the UK at the moment about soaring energy builds it's hard to see how anyone could not be angry on the one hand we have people being forced to make a choice between Heating and eating on the other we have energy companies such as shell and centrica which owns British gas announcing record profits much of the media conversation around the topic has framed this current crisis as an exceptional phenomenon and there is much about it that is unique and hopefully temporary but when we take a longer view it becomes obvious that the price gouging and profiteering we're currently seeing is only really a more concentrated Shameless version of practices that have just become routine 25 years since the UK completed its transition to a privatized energy sector the data is clear all else being equal Energy prices consistently went down under public ownership under privatization we've just had to come to expect that they will rise year on year if we want to get energy prices back under control in the long term that can only happen by bringing the sector back into public ownership in 2016 a professor at the University of Greenwich David Hall estimated that renationalizing the energy sector would cost in the region of 24 billion pounds which initially sounds like a lot I mean it's probably about 24 billion cans of beans more if you go own brand but it is far less than the government is currently spending in subsidies to keep the facade of competition alive if we take into account the ongoing savings which would be made by not paying out all those dividends to foreign investors it's basically a no-brainer it's not even a particularly controversial policy polling for salvation in 2022 found that even 62 percent of conservative voters are in favor of energy nationalization but it's not only because it would save money or because it is popular that public ownership of the energy sector just makes sense as we've seen placing these key aspects of a country's infrastructure into private hands opens up all kinds of risks with regards to energy reliability and security it's also an ongoing hurdle in the transition to a zero carbon future under privatized systems governments are forced to set up all kinds of incentives and subsidy schemes to strong-arm energy companies into adopting Greener practices under a publicly owned system all that would be unnecessary we could just like do it but as important is the manner in which a return to public ownership might change the way in which we think about energy doing so might help us to once again recognize that the ability to light and heat one's home to cook food and even to watch hour-long YouTube videos about energy privatization in the evening is not a commodity but a human necessity and that the provision of the means to do so should be a public service and not a vehicle for profit thank you so so much for watching this video I hope that it's been worthy of your time and that you've hopefully learned something new uh maybe a few things along the way uh and yeah if you know of anyone else who you think also might like to learn something new about energy privatization and its opposite and consequences then I'd be super 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