The cost of gas

Recently British Gas announced price rises of 35% - the biggest one-off increase in energy prices ever recorded.
Meanwhile the oil giant BP announced half-year profits of £6.75 billion – or £37 million a day - an increase of 23% on last year, largely fuelled by the worldwide surge in oil prices.
The reality behind these figures is misery for millions of people – pensioners crouched around a one-bar electric fire in the middle of a freezing January; families unable to visit grandparents because of the prohibitive cost of petrol.
There is no doubt the pain is real - decisions made in oil company boardrooms and far-off sheikhdoms can have a devastating impact on our daily lives.
In such situations it is tempting to search for an easy scapegoat - and the oil and gas companies are an obvious target.
A consensus is beginning to develop - if only the government can be persuaded to hammer the energy companies hard enough, everything will be fine. What we need is a windfall tax on the fat cats of the oil and gas industries!
Well, not so fast. If history teaches us anything it is that we should beware politicians promising glib solutions to complex problems.
And if left wing MPs, the trade union movement and the eco-zealots are all agreed on something - as they are over a windfall tax - you can guarantee it will be 100% wrong.
The first thing to note is that increases in oil company taxes won't make a blind bit of difference to world oil prices that are largely responsible for rising fuel bills.
In fact one of the reasons fuel is so expensive in the UK is because of the high taxes already imposed.
When you pay 118 pence for a litre of unleaded, just 1 penny goes towards oil company profits, while the government collects more than 50 pence in tax.
Similarly of each £100 you pay for domestic gas, £3 goes in profit and about £6 in taxes to the government.
So who is really to blame for high prices?
If ministers are so concerned about fuel poverty, perhaps they should reduce the tax burden, rather than increasing it.
An energy windfall tax might be more popular if the government could guarantee that the revenue raised would be used to help the most vulnerable in society.
But we know that would never happen. Instead the money would gobbled up by the bloated state - yet more £50,000 a year sinecures for otherwise unemployable members of the Guardian-reading elite.
Do we really want to hammer some of the country's most successful companies just so the state can recruit yet more real nappy co-ordinators and five-a-day facilitators?
This is not to say that nothing should be done. Indeed the current energy price shock offers some important lessons we need to learn.
At present clean, carbon-free nuclear power provides around a fifth of our electricity needs, yet within the next fifteen years all but one of our ageing nuclear power stations will close, leaving us even more reliant on despotic and unstable regimes that supply much of our gas.
If we are to secure our energy needs in the future, prevent future price shocks and reach our carbon reduction targets we need a massive increase in nuclear energy alongside clean coal technology.
There is no time to lose.