A cold winter is coming. The cost of NATO’s inter-imperialist conflict with Russia is falling squarely on workers and the poor in the form of skyrocketing bills and frigid homes, while a handful of gas and oil barons are reaping handsome rewards.
Last month, ousted British Prime Minister Boris Johnson made a ‘farewell’ trip to Kyiv, where he was decorated with the ‘Order of Liberty’ in recognition of his (cynical, self-serving) support for Ukraine. In his acceptance speech, he said: “If we’re paying in our energy bills for the evils of Vladimir Putin, the people of Ukraine are paying in their blood.”
Johnson’s successor, Liz Truss, concurred that higher energy is a “price worth paying” to defend Ukraine. Similarly, European Commission chief Ursula von der Leyen stated in an interview for Reuters that opposing Putin “comes at a high cost, but our freedom, the international peace order, and democracy, is priceless.” Having incurred these high energy costs through imposing sanctions on barbaric, tyrannical Russia, the European bourgeois hopes to make up the shortfall by reaching out to those noted democrats in Saudi Arabia!
Behind the fine words, the question stands: who will be paying the ‘high cost’ for our ‘priceless freedom’?
A winter of discontent
In Europe, benchmark gas prices have risen by a whopping 550 percent in 12 months (August to August). Governments are implementing various measures to soften the blow: spending billions to reduce reliance on Russian imports, bailing out local energy companies, and capping prices.
In Europe, benchmark gas prices have risen by 550 percent in 12 months / Image: Carlos534
Collectively, EU member states have allocated €500 billion to tackle the energy crisis: adding to a mountain of debt. Despite these efforts, the impact on ordinary people has been brutal.
German household gas bills have more than doubled compared to this time last year. People are being forced to heavily cut back on basic amenities, and to maintain energy reserves, public buildings will no longer be heated.
Meanwhile, landlords are imposing energy frugality in an effort to bring down costs. The German real estate group Vonovia has said it will lower tenants’ heating during the night between 11pm and 6am to “save as much gas as possible”.
In Dippoldiswalde, some tenants have been banned from taking hot showers between 8am-11am (when most people are getting ready for work), 1pm-5pm, and after 9pm.
The spectre of mandatory blackouts in the frigid winter months means that many European governments are running campaigns to convince the public to ‘do their bit’: turning down thermostats, shutting off their lights, air drying their clothes and so on.
For the better off, cutting down energy usage might be a ‘patriotic choice’. For most, it is an economic necessity.
Carl, 33, from Saxony (one of Germany’s coldest regions), explained in The Local that his energy usage was low before the crisis, and there’s little left he can cut back on. Even turning the heat on every other day might be unaffordable, given the current prices.
“We used to have a surplus each month of about €200,” he said. “With inflation and fuel prices that’s gone. I got a pay rise that was swallowed up too. We currently just about make ends meet.”
An inability to pay for central heating will mean a sharp increase in ‘excess deaths’ in freezing conditions.
In Britain, a survey of 2,000 people found 23 percent planned on turning their heating off entirely over the winter. The burden of rising bills is felt most keenly by the poorest 10 percent of households on prepaid tariffs and communal heating, who spend 11 percent of their total budget on gas and electricity, compared to 4 percent for the richest.
The pressure group Fuel Poverty Action predicts this will all amount to “many thousands of deaths in cold, damp homes”.
We can add to this the impact of rising energy bills on local authorities, which were already battered by years of austerity. Schools, libraries, nurseries and NHS services are anticipating a “catastrophic” winter, in which they will have to cut millions more from their overstretched budgets just to cover their energy costs.
None of this will make material difference to the rich, who can swallow higher energy bills, rely on private healthcare, and hire a nanny to look after their kids if the nurseries close.
Misery for most, a bonanza for the bosses
All the misery at the bottom represents a bonanza for the big energy firms. Last year, the chief executive of British Petroleum (BP), Bernard Looney, described the energy market as “a cash machine”. With the war in Ukraine driving up the price of oil and gas, that machine is pumping out profits like never before.
Following Russia’s invasion of Ukraine, fears of supply shortages caused the wholesale price of oil and gas to soar, which is great news for the energy giants and their shareholders. BP reported its highest quarterly profits in 14 years between April and June 2022, at £6.9bn, with the likes of Equinor, TotalEnergies, Centrica, Shell, citing similar windfalls.
British PM Liz Truss has rejected the UN's call for a windfall tax, stating it would “send the wrong message to investors” / Image: Prime Ministers Office
But the energy fat cats want us to know they understand our pain!
In a conference call last month, Mr Looney struck a less celebratory tone, stating: “In terms of cost of living we all have to recognise that it’s a very, very difficult place for people, not just, by the way, in the UK but across the world right now. We understand that, we get it.” (our emphasis).
It has been estimated that UK gas producers and electricity generators will make excess profits totaling as much as £170 billion over the next two years. I’m sure it’s all Looney can do to solemnly pocket his dividends.
In fact, Looney and his ilk understand nothing: they live in a different universe from the billions of people whose lives are ruined by their parasitic profiteering. Even before the cost-of-living crisis, these vultures benefited from heaps of state money, with fossil fuel subsidies totalling $5.9tn (or 6.8 percent of world GDP) in 2020 alone.
And today, the bourgeois politicians tinker around the edges, leaving the bulk of the capitalists’ new superprofits untouched.
The European Commission has announced plans to impose a 33 percent windfall tax on energy profits, and divert the proceeds to help households and businesses. But a report by Oxfam has suggested the Commission’s levy would have to be set at between 50-90 percent to make any difference to “ordinary people [facing] skyrocketing energy bills.”
Meanwhile, energy companies are making five-times the profits they would normally expect for this time of year out of the European market.
UN chief Antonio Guterres recently urged all member states to impose windfall taxes, accusing the fossil fuel industry of “feasting on hundreds of billions of dollars in subsidies and windfall profits while household budgets shrink and our planet burns.”
He’s not wrong. But simply taxing the superprofits of the energy companies will make little fundamental difference to the crisis of living standards or the climate. Both result from the private ownership of essential resources, which are exploited for profit rather than utilised for humanity’s benefit.
Many bourgeois politicians are not even willing to go as far as taxing the energy barons’ ill-gotten gains. British Prime Minister Liz Truss has rejected the idea of a windfall tax, stating it would “send the wrong message to investors”.
Instead, she announced a £130bn support package, including freezing energy bills for households and small businesses at £2,500 a year (compared to £764 in 2021). This bailout will compensate the capitalists through new borrowing, with a plan to pay it off over the next two decades.
It is little wonder that Truss has taken such pains to protect the energy bosses’ profits. After all, she cut her teeth in the corporate world as a graduate trainee for Shell, and her single biggest leadership campaign donation, of £100,000, came from the wife of James Hay, a former BP executive with a luxury goods empire.
She has also just appointed former EDF lobbyist Michael Stott as the head of business relations for Number 10 Downing Street. At the very least, we can say that the rich are ‘all in it together!’
Longer term, Truss seeks to tackle Britain’s energy woes by dishing out fracking contracts. Even after factoring in these ‘solutions’, which will incur decades of austerity and potentially wreck the environment, working people are still left with massively inflated energy bills as the winter months draw nearer.
Fortunately, some intrepid millionaires have come up with ingenious, ‘homespun’ solutions to save on energy. Johnson, for instance, flew back from Kyiv for a press conference where he offered the following gem:
“If you have an old kettle which takes ages to boil, it may cost you £20 to replace it – but if you get a new one, you’ll save £10 a year every year on your electricity bill.”
An entire £10 a year saved! We must try not to spend it all at once.
Former MP Edwina Currie, best known for sparking a national panic in the 80s about the dangers of salmonella-affected eggs, suggested putting tin foil down the back of the radiator to preserve excess heat.
And if neither of these proposals do the trick, members of the public could call in to the ITV talk show ‘This Morning’, where hosts Holly Willoughby and Phillip Schofield gave contestants the chance to win a month’s energy bills by spinning a giant prize wheel.
#ThisMorning has turned completely dystopian and Black Mirror by offering to pay energy bills as a competition prize. pic.twitter.com/hs1DD6NXbo
— Scott Bryan (@scottygb) September 5, 2022
Not only are people struggling to survive, while a handful of billionaires pocket a small fortune, but it seems as though the establishment is laughing at us. Condescending, ineffective and downright dystopian responses to the energy crisis are adding to a seething groundswell of resentment.
Imperialism, price gouging and insurrection
And this resentment is exacerbated by evidence of price gouging. For instance, the wholesale price of oil fell in recent weeks, from a high of about $140 a barrel in February to about $110 today. This is due to countries securing alternatives to Russian oil, resulting in rising output from other oil-producing companies that is slowing global demand.
But the big retailers are not passing on these reduced prices at petrol pumps. A spokesperson for the RAC in Britain stated that “July [was] an unnecessarily tough month for drivers due to the big four supermarkets’ unwillingness to cut their prices to a more reasonable level, reflecting the consistent and significant reductions in the wholesale cost of petrol and diesel.”
Soaring energy costs provoked an insurrection in Kazakhstan in January before the Russian invasion of Ukraine / Image: fair use
The big supermarket chains have accused oil refineries in turn of not passing on the drop in wholesale prices to them. Either way, the result is the same: the average cost of a full tank of petrol for UK motorists exceeded £100 for the first time ever, and someone is making a tidy profit at our expense.
And on the world stage, the wealthiest imperialist countries are using their economic and political clout to prevent poorer countries from sourcing cheaper oil from their opponents.
For instance, Indonesia recently cut energy subsidies, after costs increased threefold in September, provoking a furious backlash from the masses.
Despite an offer by Russia to purchase oil at 30 percent below the market rate, the US has threatened to sanction any buyers of Russian oil that rely on western services if they fail to abide by the price cap proposed by the G7. This means ordinary Indonesians are turned into collateral damage in energy warfare between two imperialist blocs.
We have already seen how soaring energy costs provoked a backlash from the masses in countries like Sri Lanka, Pakistan, Bangladesh, Panama and elsewhere. This scenario will be repeated in one country after another, as the energy crisis shows no sign of abating.
It actually began before the Russian invasion, triggering the insurrection in Kazakhstan in January, for example. One study shows that 10,000 energy protest events took place in 138 countries between 21 November 2021 and the first week of August this year.
Opposition is already building in Europe. Last month, in Naples, hundreds of residents protested outside the city hall, burning their exorbitant energy bills, chanting: “We don't pay the bills! Now it will be chaos!”
The Czech Republic currently has the highest energy costs on the continent when adjusted for purchasing parity. Prime Minister Petr Fiala’s only response has been to suggest that people get through the winter by putting on sweaters.
The arrogance of these representatives of the ruling class was met by a mass protest on the streets of Prague, which despite its political confusion, clearly directed fury at the government, and its involvement in NATO’s proxy war. This represents a major shift in the situation, as Czech support for Ukraine was very high at the beginning of the invasion.
Shifting sands
The changing mood is hardly surprising: people are fed up at having to make sacrifices while a minority of crooks profit from the chaos that surrounds them. The hypocrisy is impossible to stomach.
“Two years of lockdowns followed now by the unknown energy pressure and costs,” said 54-year-old Munich resident Fiona. “I feel as though we are living on permanently shifting sands. The older we get, the longer we work, the poorer we seem to become.”
This eloquently captures what millions of people are feeling at this juncture. The situation is pregnant with class struggle, a fact that is not lost on the ruling class. The risk consultancy Verisk Maplecroft wrote in a report on 2 September:
“The world is facing an unprecedented rise in civil unrest as governments of all stripes grapple with the impacts of inflation on the prices of staple foods and energy…
“For governments unable to spend their way out of the crisis, repression is likely to be the main response to anti-government protests. But suppression comes with its own risks, leaving disgruntled populations with fewer mechanisms for channelling their dissent at a time of growing frustration with the status quo.”
This is well said. People are tired of having to choose between eating a hot meal – or at all – and heating their homes, while the energy moguls count their billions. The slide into barbarism will not be endured lying down. Enough is enough.