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“...we, in the name of the Republic, declare the right of every citizen to an adequate share of the Nation's labour.”

~ Democratic Programme of the First Dáil 1919

The Rising Price of Energy

Over the course of the last six years international energy prices have been steadily rising. The price of oil in 2002 averaged (US) $25 per barrel. The equivalent figure for 2007 was greater than (US) $70. International gas prices have followed a similar pattern over the same period.

The international energy market operates on a simple supply and demand basis. The rises outlined above can be attributed to a combination of reduced supply and increased demand. Much of the world’s known oil and gas reserves are located in countries which are, or may be, subject to external or internal political factors resulting in the interruption of supply. The most obvious current examples of such countries being Iraq and Iran. Meanwhile the demand for energy is increasing across the globe with demand from China and India in particular rising at a phenomenal rate.

It is likely that such supply and demand problems would be resolved over time if there were unlimited reserves of oil on gas on the planet, which of course there are not. Known reserves of easily recoverable oil and gas are slowly running out, which in turn is causing long-term upward pressure on prices. Estimates for how long these reserves will last vary hugely, from anywhere between forty and a hundred or more years. Regardless of disagreements regarding when exactly these reserves will be depleted most experts agree that the days of ‘cheap’ hydrocarbon-based energy are over for good.

For any state that imports a high percentage of its energy requirements the prospect of ever-increasing energy prices represents a serious threat to both the economy and the general population. The twenty-six counties currently imports in excess of 85% of its energy requirements. To compound the problem Ireland is at the tail-end of the European gas network and is thus more vulnerable to interruption of supply to Europe, as happened in the winter of 2006 when Russia stopped supplying gas to the Ukraine.

The issue of security of energy supply is one that requires long-term planning and vision, something that has been sadly lacking from successive Dublin governments. éirígí believes that any oil and gas reserves discovered in Ireland, either onshore or offshore, should be used to secure Ireland’s energy requirements over the coming years. In addition éirígí believes that the wealth generated from these reserves should be used in two ways. A portion of the money should go to the provision of essential services such as schools, hospitals and roads with the remainder being invested in the development of renewable energy technology so that our reliance on hydro-carbons can be significantly reduce.

Listed below are the increases in energy prices experienced in Ireland over the last seven years.

Gas:
Bord Gáis, the primary supplier of gas in the twenty-six counties, had implemented a price freeze from the mid 1980’s until 2003. This freeze was partially made possible by security of supply from the Kinsale gas field. However, since April 2003 the price of gas has risen steadily as Bord Gáis has purchased an ever increasing proportion of its gas on the international energy market.

Just how dramatic those rises have been can be seen by taking a €100 domestic gas bill from March 2003 and seeing how much more it cost over the following five years to purchase the exact same amount of gas. At one point the price of gas supplied by Bord Gáis rose by an incredible 103% in less than four years!
 

*Bord Gáis and the Commission for Energy Regulation

While the price of Bord Gáis gas dropped between February 2007 and October 2007 this reprieve was short lived. On July 25, 2008 the Commission for Energy Regulation authorised Bord Gáis to increase its prices by 20% from September 2008. The CER also announced that it expected that there would be a second price rise, of a similar proportion, before the end of 2008. If this second rise is granted the price of Bord Gáis domestic gas will have risen by more than 135% in less than six years.

Electricity:
Close to 45% of the electricity generated in the twenty-six counties comes from natural gas. An additional 13% is generated from imported oil. This is a particularly high rate of reliance on imported fossil fuels when compared with other European countries.

The ESB is the primary producer and supplier of electricity in the twenty six counties. The ESB, like Bord Gáis, is at the mercy of the international energy markets. Any rise in the price of energy is quickly followed by a rise in the price of electricity to domestic and industrial customers.

A study of the increase in prices charged by the ESB to domestic users over the last six years demonstrates once again how important it is for the Dublin government to secure long-term energy supplies at an affordable and stable price.

The example below charts how the price of electricity has risen by almost 90% since 2001.
 

*ESB & Commission for Energy Regulation