Oil price shock: Professor Cameron Hepburn comments
Cameron Hepburn, Battcock Professor of Environmental Economics at the Smith School of Enterprise and the Environment, comments on the ongoing oil price shock and its ramifications for UK households and the clean energy transition.
“The surge in oil prices past $110 a barrel following the Iran conflict is the most significant energy shock since Russia's invasion of Ukraine, and the echoes of 1973 are hard to ignore — petrol station queues are already forming across the UK and the government has had to reassure the public there is no fuel shortage - which there isn't.
Drivers will feel the impact at the pump within ten to fourteen days, but the 1.5 million households reliant on heating oil are being hit right now, with costs jumping by hundreds of pounds in a matter of days.
For the roughly 33 million households on standard energy tariffs, the Ofgem price cap shields them until July, but wholesale gas prices have already surged and that protection simply delays the pain by a few months.
It might seem really worrying that the UK's gas storage currently holds barely a day and a half of supply — down from twelve days a few years ago. Actually, though, we currently have reliable supplies through Norwegian pipelines, even if we are now paying the highest wholesale gas prices in Europe for the privilege.
Unlike 1973, we now have a partial insurance policy: wind and solar generate roughly a third of our electricity and are completely insulated from events in the Gulf. The tragedy is that consumers don't yet benefit from that cheap homegrown power, because our electricity market still prices all power off the most expensive gas plant running at any given moment — meaning even EV drivers will end up being partly hit by a fossil fuel shock that moves into higher power prices.
Every pound invested in renewables, insulation grid infrastructure and other clean technologies permanently reduces our exposure to exactly this kind of geopolitical crisis. The energy transition is no longer just climate policy — it is the most credible energy security strategy the UK has.”
Notes to editors
Professor Hepburn is available for interview. Please contact:
Tom Pilsworth, Media & PR Manager (Phone: 44+ (0)7785371310)
Or
Lucy Erickson, Head of Strategic Communications
About the Smith School of Enterprise and the Environment
The Smith School of Enterprise and the Environment at the University of Oxford equips enterprise to achieve net zero emissions and the sustainable development goals, through world-leading research, teaching and partnerships.
