Aurelia Butler

British households face average annual energy bills surging above £5,000 next year, according to the latest forecast, which will heap further pressure on the government to intervene to ease the spiralling cost of living crisis.The warning from consultancy Auxilione follows a steep rise in wholesale British gas prices this week and comes as ministers meet electricity generators in Downing Street on Thursday morning. The talks will focus on how to respond to the impact of rising wholesale energy prices driven primarily by Russia’s squeeze gas on supplies to Europe.The price cap, which governs gas and electricity bills for the vast majority of UK households, has already jumped to £1,971 from £1,277 this year. Earlier this week, another forecast suggested it would hit £4,420 next April, more than three times the level it was at the start of 2022.Auxilione said it expected regulator Ofgem to set the price cap at “just over £3,600” when it announces the results of its next review, now held every three months, on August 26. That rise would take effect in October before the cap was expected to exceed £5,000 in the first half of 2023, the consultancy added.Earlier this week, Cornwall Insight forecast the cap would reach £4,420 in the spring, but wholesale gas and electricity prices have risen further in recent days.The Auxilione forecast follows warnings of a severe drought affecting shipments of coal and other commodities on the river Rhine in Germany, a key artery for supplying power stations. Norway has also signalled it will restrict electricity exports.Gas prices have soared as Russia has curbed supplies to Europe, in a move European politicians have decried as a “weaponisation” of gas supplies following the full-scale invasion of Ukraine.Surging energy bills has become a key issue in the ruling Conservative party’s leadership election that will appoint a new prime minister to replace Boris Johnson in early September.Rising inflation and concerns that sky-high energy prices will tip the wider economy into a deep recession as households cut back on spending have led to calls for more aggressive government intervention, from additional financial support to an overhaul of how electricity markets function.The prospect of a windfall tax on electricity generators, some of whom have enjoyed bumper profits from renewables and nuclear generation, has resurfaced.Chancellor Nadhim Zahawi has kept alive the prospect of hitting the generators with an additional tax bill if they do not invest their profits in renewable energy schemes, though other options are also on the table.Business and energy secretary Kwasi Kwarteng — who is widely tipped to be the next chancellor if leadership frontrunner Liz Truss becomes prime minister — is looking at options to decouple electricity prices unassociated with gas generation. Companies including EDF, Centrica, Drax and RWE are attending the meeting with Kwarteng and Zahawi.

Former chancellor Rishi Sunak, who is running against Truss, has accused his rival of being slow to appreciate the depth of worry among households and the need for additional financial support. He has promised to expand a £15bn support package he announced in May. At the time bills were expected to reach about £2,800 in October.Truss has said she favours tax cuts over “handouts” but has left open the door to additional support. She said on Wednesday it was “important” to work with energy companies to bring prices down.Auxilione said there appeared to be “little appreciation” in government “for just how impossible” it would be to lower prices. “Energy companies and the government have little control over this in such a globally influenced market,” it added.Ofgem has cautioned about forecasts for the price cap given the volatility in energy prices. More

Poland is eligible for 24 billion euros in grants and 11.5 billion euros in very cheap loans to rebuild its economy greener and more digitalised after the COVID-19 pandemic.But the money is frozen because Poland’s ruling eurosceptic PiS party does not want to roll back changes to the judiciary introduced over the last seven years, even though it is one of the conditions that was jointly agreed with the Commission.PiS leaders this week vowed they would not make any concessions and threatened to make EU decision-making difficult unless Poland can draw on the EU fund.”The Commission and Poland have discussed this plan for months, in every detail, it has been signed by both sides, so there is no space for misunderstandings,” a Commission spokeswoman told a regular briefing.”It is clear that the agreed milestones and targets have to be met,” she said. More

Western sanctions have had “limited impact” on Russian oil output since the start of the war in Ukraine, the International Energy Agency said on Thursday, as it raised its forecast for Russian crude production into 2023.Moscow’s exports of crude and oil products to Europe, the US, Japan and Korea had fallen by nearly 2.2mn barrels a day since its full-scale invasion of Ukraine, the Paris-based group said. But the rerouting of flows to countries including India, China and Turkey had mitigated financial losses for the Kremlin.Russian oil production in July was only 310,000 b/d below prewar levels, a fall of less than 3 per cent, while total oil exports were down about 580,000 b/d, according to the IEA’s latest monthly oil report. As a result, Russia would have generated $19bn in oil export revenues last month, and $21bn in June, the IEA’s data showed.“Asian buyers have stepped in to take advantage of cheap crude,” the IEA said, with China having overtaken the EU as the biggest importer of Russian crude in June.Increased demand for Russian crude compared with earlier in the year also meant that the discounts being paid for Russian cargoes had narrowed, it said. Although an EU embargo on Russian crude and products — due to come into full effect in February 2023 — would result in further declines in European imports, “some policymakers have suggested a possible softening of measures”, it added.Last month, the EU loosened its restrictions on supplying Russian oil to countries outside of the bloc. Meanwhile, the US is pushing G7 countries to support a price cap mechanism that would allow some Russian oil to reach third countries as long as they agreed to pay a below-market price for the cargo.In response, the IEA said it had increased its Russian production forecast for the second half of 2022 by 500,000 b/d and by 800,000 b/d for 2023.The revised Russian outlook came as the IEA also increased its global oil demand forecast for 2022 by 380,000 b/d, despite signs of an economic slowdown. Record European prices for natural gas following the invasion had spurred “substantial” gas-to-oil switching for power generation that is set to boost crude consumption for the rest of the year even as demand growth from other parts of the economy slows.“These extraordinary gains, overwhelmingly concentrated in the Middle East and Europe, mask relative weakness in other sectors, but will propel demand higher by 2.1mn b/d to 99.7mn b/d in 2022 and by a further 2.1mn b/d to 101.8mn b/d in 2023,” the IEA said.Oil use for power generation has also been pushed higher by increased electricity demand due to the global heatwave, which has seen temperatures hit record levels in some parts of the world, including the UK. Oil burning has soared in Saudi Arabia and Iraq but also increased in Portugal, UK, Spain, Germany and Italy, it said.The EU’s commitment to reduce member countries’ gas consumption by 15 per cent from August 2022 to March 2023 will continue to increase oil demand by roughly 300,000 b/d for the next six quarters, the IEA added. More

WASHINGTON (Reuters) – China’s war games around Taiwan have led Biden administration officials to recalibrate their thinking on whether to scrap some tariffs or potentially impose others on Beijing, setting those options aside for now, according to sources familiar with the deliberations.President Joe Biden’s team has been wrestling for months with various ways to ease the costs of duties imposed on Chinese imports during predecessor Donald Trump’s tenure, as it tries to tamp down skyrocketing inflation. It has considered a combination of eliminating some tariffs, launching a new “Section 301″ investigation into potential areas for additional tariffs, and expanding a list of tariff exclusions to aid U.S. companies that can only get certain supplies from China.Biden has not made a decision on the issue and all options remain on the table, the White House said. The tariffs make Chinese imports more expensive for U.S. companies, which, in turn, make products cost more for consumers. Bringing down inflation is a major goal for Biden, a Democrat, ahead of the November midterm elections, which could shift control of one or both houses of Congress to Republicans.But Beijing’s response to U.S. House Speaker Nancy Pelosi’s visit last week to Taiwan triggered a recalculation by administration officials, who are eager not to do anything that could be viewed by China as an escalation while also seeking to avoid being seen as retreating in the face of the communist country’s aggression.China’s military for days took part in ballistic missile launches and simulated attacks on the self-ruled island of Taiwan that China claims as its own.”I think Taiwan has changed everything,” said one source familiar with the latest developments in the process, details of which have not been previously reported.”The president had not made a decision before events in the Taiwan Strait and has still not made a decision, period. Nothing has been shelved or put on hold, and all options remain on the table,” said White House spokesperson Saloni Sharma. “The only person who will make the decision is the president – and he will do so based on what is in our interests.”Asked why a decision was taking so long, Commerce Secretary Gina Raimondo referred to the complicated geopolitical situation.”After Speaker Pelosi’s visit to Taiwan, it’s particularly complicated. So the president is weighing his options. He is very cautious. He wants to make sure that we don’t do anything which would hurt American labor and American workers,” she said in an interview with Bloomberg TV. EXCLUSIONS LISTWith the most forceful measures regarding tariff relief and tariff escalation largely on the back burner for now, focus is on the so-called exclusions list.The Trump administration had approved tariff exclusions for more than 2,200 import categories, including many critical industrial components and chemicals, but those expired as Biden took office in January 2021. U.S. Trade Representative Katherine Tai has reinstated only 352 of them. Industry groups and more than 140 U.S. lawmakers have urged her to vastly increase the numbers.The Biden administration’s next steps could have a significant impact on hundreds of billions of dollars of trade between the world’s two largest economies. U.S. industries from consumer electronics and retailers to automotive and aerospace have been clamoring for Biden to eliminate the duties of up to 25% as they struggle with rising costs and tight supplies.The tariffs were imposed in 2018 and 2019 by Trump on thousands of Chinese imports valued then at $370 billion to pressure China over its suspected theft of U.S. intellectual property.Some senior administration officials, including Treasury Secretary Janet Yellen, had argued the duties were imposed on “non-strategic” consumer goods that had unnecessarily raised costs for consumers and businesses, and removing them could help ease rampant inflation. Tai argued the tariffs were “significant leverage” that should be used to press China for changes to its behavior.MULTIPLE FACTORSMultiple factors, in addition to China’s Taiwan response, have complicated the administration’s deliberations.As U.S. officials considered getting rid of some of the tariffs, they sought reciprocal rollbacks from Beijing and were rebuffed, two sources said. One of the sources, who said a unilateral removal of some U.S. tariffs on Chinese imports has been put on hold, said this was done in part because China failed to show any willingness to take reciprocal actions or meet its “Phase 1” trade deal commitments.A spokesperson for the Chinese embassy in Washington said economic and trade relations between the two countries faced “severe” challenges.”The (Pelosi) visit has undermined the political foundation of the China-US relations and will inevitably cause major disruption to the exchanges and cooperation between the two sides,” Liu Pengyu said in an email to Reuters.The trade deal, reached at the end of 2019 with the Trump administration, required China to increase its purchases of U.S. farm and manufactured goods, energy and services by $200 billion in 2020 and 2021 over 2017 levels. China fell well short of these commitments, which included a $77.7 billion two-year increase in imports of U.S. manufactured goods, including aircraft, machinery, vehicles and pharmaceuticals. The Peterson Institute for International Economics estimates that China effectively bought none of the extra goods it promised. Beijing blamed the COVID-19 pandemic, which began just as the deal was signed in January 2020.The U.S. Trade Representative’s office is now in the midst of a statutory four-year review of the tariffs imposed by Trump, which could take a few more months to complete. Final public comments on whether to keep them in place are due by Aug. 23.Union groups led by the United Steelworkers have urged USTR to keep the tariffs on Chinese goods in place to help “level the playing field” for workers in the United States and reduce U.S. reliance on Chinese suppliers.Biden has been concerned about rolling back tariffs in part because of labor, which is a key constituency for him, and because of China’s failure to buy the products it had agreed to purchase, according to the first source. The White House has declined to lay out a timeline for when a final decision will be made. More