National energy sectors and are still heavily dependent on the global oil market, and the global oil market is so finely balanced that any disruption ripples out to affect most of the world. This means that domestic energy prices can be heavily influenced by incidents half a world away.
The best way to avoid these price spikes is to obtain a certain level of, or complete, energy independence, or use energy sources that don’t rely upon the global oil market.
An analysis by Oxford Economics, commissioned by the UK government, and presented by the Secretary of State Energy and Climate Change, Edward Davey, reports that in 2050 the negative impact that spikes in oil price have on the UK could be reduced by over 50 percent as a result of successful climate change policies.
By using low-carbon forms of electricity generation, renewable, and nuclear energy, and by implementing more energy efficient systems the UK can reduce its sensitivity to changes in the prices of oil and gas.
Davey said that, “every step the UK takes towards building a low-carbon economy reduces our dependency on fossil fuels, and on volatile global energy prices. Only last year, the impact of the Arab Spring on wholesale gas prices, pushed up UK household bills by 20%.”
“The more we can shift to alternative fuels, and use energy efficiently, the more we can ensure that our economy does not become hostage to far-flung events and to the volatility of market forces.”
“Of course, there are costs to building more low-carbon plant, but the gains are so much greater, and crucially they are lasting. This is about building a more resilient economy and providing more stable energy prices for the generations that follow us.”
By. Joao Peixe of Oilprice.com
Joao is a writer for Oilprice.com