A few days ago a link to a UK government report called Quarterly Energy Prices landed in my in box. At the end was a series of interesting charts comparing liquid fuel, natural gas and electricity prices across Europe. This post presents these charts alongside some simple but rather interesting observations.
Let me begin by taking a look at liquid fuel. Some key observations:
- Diesel is marginally more expensive than petrol
- The cost of the raw product (ex tax) is pretty well uniform across countries, thus what little variation there is in price comes from different tax levels
- There is little variation in price between countries with the ratio of most expensive / least expensive = 1.4 (petrol) and 1.5 (diesel).
- Luxembourg has the cheapest diesel and petrol while the UK is about the mid point for petrol but has the most expensive diesel.
The relative uniformity of price throughout The Common Market presumably discourages motorists crossing borders bargain hunting.
Natural gas and electricity prices have two main tariffs, one for domestic users and one for industrial users, the industrial tariff being much lower than the domestic tariff.
- The Netherlands and Denmark, the two gas exporters, have the lowest raw prices.
- Otherwise it is difficult to rationalise the variations since the pattern of raw price variations for domestic and industrial varies.
- Excluding the high and low outliers, the mean ratio of domestic / industrial price = 2.1±0.25 (1SD)
- The main trend in domestic prices is caused by progressive higher tax levels.
- Surprisingly, The Netherlands, with the EU’s largest gas resource also has the second and third highest prices owing to high tax levels.
- The UK has the third and fourth lowest gas prices.
When we get to electricity the picture becomes much more confusing, especially with the reported tax levels. For example, for domestic electricity, Denmark has a raw price of around 7 p / kWh and retail price 3.4 times higher at 24p. While the UK has a raw price of about 14p / kWh and retail price of about 15p. These cannot possibly be counting the same thing. It seems that many European countries count the various subsidies as tax while the UK treats subsidy as raw price. I have written to the new UK Dept of Business Energy and Industrial Strategy (BEIS) for clarification, but they are still on holiday.
There are a couple of clear observations to make:
- High nuclear countries France, Sweden and Finland have among the lowest industrial and domestic electricity prices.
- There is a clear trend where the pattern of rising price is down mainly to rising tax, which I suspect is actually rising subsidy payments to producers. In the domestic chart (35) I have noted the installed solar and wind capacities per capita (2014) from an earlier post titled Green Mythology and the High Price of European Electricity. High electricity prices are clearly linked to the level of penetration of wind and solar.
- The ratio of domestic / industrial price varies from 1.5 (UK) to 3.6 (Sweden). This can be viewed as industrial support policy where Sweden is doing all it can to support industry while the UK provides least support. The ratios are tabulated below.
Domestic and Industrial electricity prices in p / kWh read from the BEIS tables.
I want to conclude by showing once again this chart from my Green Mythology post. It plots electricity price v installed wind and solar capacity / capita. And below that a plot from An Update on The Energiewende that shows a breakdown of components in German Electricity price. There has been a lot of debate recently about the cost and price of renewables. The evidence remains clear that high electricity prices are linked to high levels of renewables penetration and the associated subsidies.