Energy policy revisited
The recent sharp falls in the oil price have dampened calls for a windfall tax on energy companies, although the profits announced by Shell and BP last week may lead to a revival.
Our concern is that the government is too keen to make demands for falls in fuel prices without taking account of the longer term interest. As we indicated in our earlier contribution, fossil fuel prices need to stay high - at least from the perspective of the consumer - in order to encourage the development of alternative technologies that do less harm to the environment.
Achieving this result will require more from the government than populist insistence on price cuts. Ministers need to be brave enough to force up prices for users, using the revenues collected to support the expansion of other sources of energy.
Policy development also needs more focus on the producer nations. Countries such as Iran, Venezuala and Russia rely on exports of energy for far too large a proportion of their revenues. It may be tempting to watch them suffer as prices collapse, given the way they used the proceeds of inflated prices to defy the democratic world, but that temptation must be resisted. Long term partnering arrangements that allow these countries to generate funds for investment in proper infrastucture and remove reliance on energy exports are the way forward, as part of an overall strategy of encouraging human rights and democracy.
This approach will require a lot of thought and coordination among the developed economies and there is an awfully long way to go before something coherent emerges. However, if we are really as concerned about the environment and climate change as we make out, then the effort must be made.
