I REFER to Jim Taylor’s letter in Friday’s National, a thoroughly confused diatribe in response to my statement of facts on Tuesday.

He seems incapable of understanding basic stuff such as what happens when the supply of a commodity is restricted while demand for it is not, its price goes up.

Until recently, about half of the UK’s electricity was produced by gas-fired turbines, so there lies the link to international gas and oil prices. Low-cost renewables (wind, hydro, solar and bioenergy) now contribute more than 40%, while nuclear provides around 15%. With the UK hell-bent on building more nuclear, the government is loath to cut the link with gas.

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Yes, Scotland is getting a raw deal on energy and, as more and more of our wind powered electricity is channelled south, we must appreciate that independence for Scotland would instantly undermine the UK’s net-zero targets. Credit for our renewables could only be granted at the expense of higher prices in England, and that’s not going to happen this side of the election – if ever.

France’s electricity is more than two-thirds nuclear, so they are cushioned from the impact of international gas prices. Norway has more than 90% of its electricity produced from hydro and Scotland will be similarly blessed with renewable electricity – when we are independent. Bring it on!

About half of the UK’s energy market is dominated by European energy companies, mostly state-owned, and any idea that those companies have our interests at heart is for the birds.

The standing charges were doubled because the war in Ukraine put several smaller UK energy suppliers out of business (with the spike in gas prices); the higher standing charge being a sop to those remaining suppliers who were able to take on the extra customers.

The UK desperately needs to reform its energy market, to decouple the price of electricity from the wholesale price of gas. We can do that as an independent nation.

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Now, on the subject of diesel. Oh dear, Jim. If you have ever put the wrong fuel into a car, you would know that there is a distinct difference between petrol and diesel.

The market for crude oil is dominated by those countries with the largest reserves, such as Saudi Arabia, Iran, Russia etc. However, it would be very difficult to run cars or fly jets with crude oil.

Crude oil has to be refined (distilled) into its various fractions, eg gas oil, kerosene, petrol, jet fuel, LPG etc, and that is where the oil majors are at play.

We have all heard of the big US oil companies like Esso, and we have all heard of Shell and BP and maybe Total. But we mustn’t forget that many developed countries have their own refineries that push products out into the market. Also, there are countless trading businesses dealing in the transportation and distribution of oil products.

The various oil fractions have different calorific values, different specifications, different handling requirements, and quite different markets. They are naturally priced independently of each other, but will all reflect the cost of input crudes and the cost of refining. They will all also be impacted by their own market’s supply and demand imbalances. In general, the prices for oil products are market-driven and very difficult to manipulate on a regular basis.

It’s a sad expectation of our capitalist society that profit margins should rise and fall with input costs. Perhaps some day there can be a morality margin introduced by regulatory authorities that will offset large swings in profit margins. I dream.

Alan Adair
Blairgowrie