Energy Secretary Ed Miliband Statement to the House of Commons: Energy markets and the Middle East

With permission, I would like to make a statement about the situation in energy markets in light of the unfolding conflict in Iran and the Middle East. 

I want to start by saying my thoughts are with British citizens and those across the world affected by the events of recent days and I want to thank members of our armed forces serving in the region and elsewhere. 

Let me update the House on the situation in global oil and gas markets and the impact on the UK. 

In the days since the conflict began, we have seen Iran target energy production and export infrastructure across the Gulf. 

Traffic in the Strait of Hormuz, through which around 20% of global oil and LNG is shipped, has declined very significantly, and the Iranian regime has issued reckless and unjustified threats to all ships using it. 

LNG production has also been halted in Qatar, following unjustified and indiscriminate Iranian attacks at the start of the week. 

The UK benefits from strong and diverse energy supplies including our own North Sea production, pipelines with Norway, interconnectors with continental Europe and three LNG terminals.
While Qatar is a major supplier of LNG globally, last year it provided the UK with 1% of our gas supply. 

I have been in touch with National Gas and NESO who are confident about our security of supply. 

On oil, we hold substantial emergency and commercial stocks and stand ready to work with the International Energy Agency to support the stability of oil markets if needed. 

As when Russia invaded Ukraine though, we will be exposed to price competition in international oil and gas markets, which is pushing up wholesale prices as other countries seek to replace lost supplies from the region. 

And this reflects our position, regardless of our domestic production, as a price taker not a price maker in these markets, leaving us exposed to their volatility, no matter where the fossil fuels come from. 

The government continues to monitor the situation closely and work with our international partners. 

In recent days I have had multiple conversations with the Executive Director of the IEA as well as with my counterparts in Qatar, Saudi Arabia, the EU, and our major UK oil and gas producers. 

I will be having further calls with our international allies and partners over the coming days. 

Madam Deputy Speaker this is a fast-moving situation, and we continue to work with our allies to seek to minimise the impact of disruption to markets and support the safe passage of oil and gas across the world. 

I know families and businesses across the country will see these global events and be concerned about the impact on their energy bills and the cost of living. 

It’s important to say the energy price cap will provide protection for households until the start of July, regardless of developments in the Middle East. 

And last week Ofgem confirmed that as a result of the Chancellor’s decisions in the Budget, the price cap will fall by 7% or £117 annually for the period covering April to June. 

The price cap for that period is fixed and will not change. 

It is a direct result of the decisions of my RHF the Chancellor to raise taxes on the wealthiest to cut bills for families across Britain. 

In addition to this, around 6 million families are benefitting from our expansion of the £150 Warm Home Discount. 

And we are delivering the biggest investment in home upgrades in British history through our Warm Homes Plan to cut bills and shield families from these kinds of fossil fuel shocks. 

On business and industry, we are taking action to expand the British Industry Supercharger from April to reduce costs for the most energy intensive businesses. 

And a significant proportion of businesses are on fixed-term contracts which shield them from market volatility for the contract duration. 

However, we do recognise that at the point of contracting businesses are exposed to international fossil fuels markets. 

And clearly for both businesses and consumers much will depend on the length of time for which this crisis lasts. 

On Tuesday in her Spring statement my RHF the Chancellor reaffirmed her commitment to prioritise families and businesses, whatever turbulence we see around the world. 

She showed her determination to act on bills at the Budget, and as we continue to monitor the effects of these events, the House and the country should be in no doubt that the Prime Minister’s number one priority is to tackle the cost-of-living crisis that affects families across Britain. 

However long this crisis lasts though, Madam Deputy Speaker, we must learn the right long-term lessons. 

The events of recent days are yet another reminder that the only route to energy security and sovereignty for the UK is to get off our dependence on fossil fuel markets, whose prices we do not control, and onto clean homegrown power that we do. 

Just several weeks ago some people were suggesting we should gamble on low fossil fuel prices and cancel the AR7 renewables auction. 

When I made my statement on that auction, I warned the House that people can have incredibly short memories, given that we are just four years on from Russia’s invasion of Ukraine. 

I warned at the time that it was a foolish and dangerous gamble to bet on geopolitical stability at a time of greater geopolitical instability than at any time for generations. 

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Instead, our AR7 renewables auction alone will supply enough homegrown, secure, clean power for the equivalent of 16 million homes. 

Power we will not have to source from the international gas market.

Power that will not be at the mercy of international events. 

Power over which we, not fossil fuel markets, have control. 

Of course, our North Sea production continues to play a very important and valuable role in our energy system. 

But as we learn the right lessons of this crisis this government will not succumb to the false arguments pedalled by some. 

It is a maturing basin and accounts for less than 0.7% of global oil and gas production. 

New exploration licences are completely marginal to that basin and would make no difference to the prices set by international markets and paid by UK billpayers. 

“More UK production wouldn’t reduce the global price of gas.”
Not my words but the words of the former Minister for Energy Greg Hands in 2022, in the midst of the last energy crisis. 

And indeed the Shadow Energy Secretary herself said in 2023 new licences “wouldn’t necessarily bring energy bills down”.

Madam Deputy Speaker, this government has taken the decision to both keep existing fields open for their lifetime, including through Transitional Energy Certificates as called for by industry.

And also not to issue new licenses to explore new fields as the science tells us is the right thing to do. 

Because this government will not ignore the biggest long-term threat multiplier to our security and stability that we face, the climate crisis. 

For us on this side, as the Prime Minister said yesterday, the lesson of Russia’s invasion of Ukraine and the lesson of recent days is that the only route to greater energy independence for Britain is our mission and we will double down on it. 

Because every solar panel we install, every wind turbine we put up, every nuclear power station we build makes us more secure as a country and protects families and businesses from these kinds of energy shocks. 

Madam Deputy Speaker, this government has learned the lessons of the geopolitical instability we have seen and continue to see.
In an unstable world, we will keep driving for energy sovereignty and abundance with clean homegrown power. 

We will not gamble with the British people’s money in the fossil fuel casino and ignore the lessons of the past. 

We have shown a determination to act to help families and will continue to do so. 

And we will work with our allies and partners to defend our national interest and seek to bring this conflict to an end for the benefit of citizens at home and the stability of the world. 

I commend this statement to the House.