This week’s article is a guest article from Gary O’Neill BSc(Hons) MRICS, Chartered Building Surveyor, Senior University Lecturer and RICS APC Assessor
If you are hoping that in the future fuel costs will reach a peak and then start to reduce then I am afraid you are going to be bitterly disappointed. There may well be short term reductions, however it is inevitable that fuel cost will not only continue to rise, but rise significantly.
http://www.kilmacenergy.co.uk/Environmental+Impact+Assessment/
There is no shortage of media coverage in respect of the impact of global warming, climate change, energy conservation, sustainability, greenhouse gas emissions an so on…….. An individual’s understanding and concern about these issues will vary significantly from those who have a genuine concern about protecting our planet for future generations to those who’s work may be directly related to these issues, right through to those who know very little and even those who make a conscious choice to ignore them! The problem is however that even if you are one of those who fall into the latter categories, it does not change the fact that you are effected in exactly the same way as everyone else. This is no more starkly demonstrated than in the increased cost of energy over recent years, which have soared to record levels.
Over the last two hundred years we have become dependent on fossil fuels such as gas, oil and coal, which have allowed us to develop our world at a staggering pace. All of this development in terms of infrastructure, buildings and the like requires large amount of energy, to heat, cool, ventilate, provide light and power etc. If we are to maintain or more than likely going to increase the rate of development around the world then we also need to consider alternative ways of creating this energy. The problem with fossil fuels is that it is a depleting resource and at some point in the future it will run out. Now this is unlikely to be in our generation or possibly even a number of generations in the future, but one thing is for certain in that it will actually run out. If you are under the impression that we should not be concerned about this now, as it will not have any major impact on us in our lifetime then think again!
The problem with anything that is in short supply is that basic economical principles come into play. Fossil fuels are a prime example of this. Remember they are a depleting resource and therefore a commodity in short supply. The impact of this is that when demand is high (which it always is) and supply is limited (which it is), then market conditions allow energy providers to increase costs as they know that they are providing something that people actually need. The market then adjusts to these increased costs. The graph below demonstrates the cost increase of oil, gas and electricity over the next twenty years:
www.castlecover.co.uk
‘Rather unsurprisingly, all four demonstrate price hikes over the period, though some are more dramatic than others. Electricity and gas – the two most-used household energies – have nearly doubled over the last seven years of the index, owing to their ties with oil prices, as well as a number of other factors. The industrialisation of foreign nations, plus growing international prices for the commodity, has forced coal costs higher for UK citizen’
If you are hoping that in the future fuel costs will reach a peak and then start to reduce then I am afraid you are going to be bitterly disappointed. There may well be short term reductions, however due to the economical principles described above it is inevitable that fuel cost will not only continue to rise, but rise significantly. Of course, the majority of articles that you will see in the media focus on the damage to the environment caused by greenhouse gas emissions, particularly carbon, from the burning of fossil fuels. This is something that we need to deal with immediately, however I would suggest that if you were to talk to most people on the high street they would be more concerned about the increase in fuel cost rather than the need to reduce greenhouse gas emissions. The positive thing however, is that if we can create energy by using alternative renewable technologies then we can deal with both issues at the same time!
http://www.link2portal.com/no-more-pv-subsidy-energy-inefficient-buildings-greg-barker
For the remainder of this article I will continue to demonstrate the financial effect of creating and using energy from fossil fuels, which is happening and impacting on us all right now! The Fuel Property Advisory Group’s 2011-12 annual report, in its executive summary states (link): ‘The average domestic dual fuel bill is now at a record high of £1,365 per annum creating severe additional hardship for some six million UK fuel poor households. The problem is even more acute for many living off the gas grid using Oil or LPG, where average fuel bills are circa £2,100 per annum. The reference to ‘fuel poor’ is more widely described as fuel poverty, which is defined by Poverty.org.uk (Link) as: ‘Households are considered by the Government to be in ‘fuel poverty’ if they would have to spend more than 10% of their household income on fuel to keep their home in a ‘satisfactory’ condition. It is thus a measure which compares income with what the fuel costs ‘should be’ rather than what they actually are. Whether a household is in fuel poverty or not is determined by the interaction of a number of factors, but the three obvious ones are: The cost of energy, The energy efficiency of the property (and therefore, the energy required to heat and power the home) and Household income’
It is abundantly clear that many in the UK are already suffering financial hardship as a result of increasing energy costs, and unless we can find alternative ways of creating our energy, then this situation is likely to become critical. Increased demand of a depleting resource is a recipe for disaster. We therefore have to introduce alternatives, which is now a necessity not a choice. If you are in one of those categories described at the beginning of this article who have not really paid much attention to these global issues, perhaps it is now time to think very carefully about how you individually and all of us collectively can save energy and also be open new technologies. This will not only provide benefits from a financial viewpoint, which may not be immediate (although costs associated with enhancements is an article in its own right!), but also from an environmental viewpoint, where we can start to have a real impact on reducing greenhouse gas emissions.
Danny McGough– A big thank you this week to Gary O’Neill for this guest article. You can follow Gary over at his personal blog ‘Surveying Property’ where he posts articles on a weekly basis on topical issues in Surveying and Property related areas and also within the wider Construction Industry at – http://surveyingproperty.blogspot.co.uk/
Information/opinions posted on this site are the personal views of the author and should not be relied upon by any person or any third party without first seeking further professional advice. Also, please scroll down and read the copyright notice at the end of the blog.
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