For veterans of the 1970s oil shock in Europe, the idea of changing behaviour in energy use to adapt to restrictions during the closure of the Strait of Hormuz has a familiar ring.
In the UK Parliament on Tuesday, the challenge was laid down by Gareth Wyn Jones, an ecologist and emeritus professor at Bangor University, who said changes to how we consume energy could follow the crisis.
“Continuous economic growth requires continuously more and more energy, and that isn't going our way,” he told a room of MPs and some of their constituents.
Presenting his new book, Energy and Power, Mr Wyn Jones acknowledged that getting people to use less of the energy-consuming technology available was difficult. “I'm in my mid 80s, and therefore I can slow down quite easily. If I was 20, I wouldn't want to slow down. I would want the buzz,” he said.
“We need to provide young people with the buzz which doesn't actually require the energy and the power of the buzz that we have now."
Ben Lake, a Plaid Cymru MP, said the crisis overseas had forced a debate about reducing energy use or moving towards renewables, which he said he was also seeing among his constituents in west Wales.
“We will be forced into considering these things. I don't think for one moment that society in its present state would want to do it voluntarily, but rather, like during Covid times, when forced to do something, society then is able to adapt quite quickly,” he told The National.
The UK government was looking at a “hybrid” position, in which sources of renewable energy, such as solar panels on balconies, could be part of households.
“Those are ways of making this transition a little easier for people, because you're not then asking them to completely dispose of all the things that make modern life quite easy and more comfortable,” Mr Lake said.
As a response to the energy crisis brought on by the Iran war, Britain could not afford a rescue package on the scale of that provided in 2022, former chancellor Jeremy Hunt has said.
That year, in the fallout of Russia's invasion of Ukraine, the government stepped in to cap energy bills at what it estimated was half the true cost. At one point under the brief premiership of Liz Truss, the subsidy was open-ended. Pared back, the package is believed to have cost around £35 billion over the six months at the most intense point of the price surge.
Cost of living indices have remained high since the combination of the 2022 energy crisis and the Covid pandemic shortages pushed UK inflation into double digits.
The closure of the Strait of Hormuz and Iranian attacks on energy sites across the Arabian Gulf has provoked another price surge in British fuel costs and a supply crunch for natural gas.
The current government has promised a much more tightly focused intervention on the poorest members of society. The think tank Resolution Foundation has estimated that, with no government action, the average UK household will be £480 worse off over the next 12 months. Figures discussed for the cost of intervention range from £3.5 billion ($4.75 billion) to £12 billion.
"The markets wouldn't allow the kind of intervention I was able to do in 2022," Mr Hunt. "The markets have noticed debt interest is now £110 billion a year. That debt overhang is the main reason why we are stuck in low-growth debt trap."
In its worldwide forecasts, the IMF said on Tuesday that the hit to UK economic growth would see gross domestic product grow by 0.8 per cent in 2026, bouncing back to 1.3 per cent in 2027.
Others are less sanguine on the potential pinch points for the government. Nick Butler, a former government adviser and BP vice president, has warned to expect fuel prices "a good deal" north of £2 a litre at the pumps.
“The real crisis for Britain and for Europe will come at the end of April and in early May, when the real shortage will translate into both a physical shortage and a sharp rise in prices," Mr Butler was quoted as saying.
“I don’t think we’ve yet seen the full impact on prices of this loss of supply.”
Natural gas makes up about 30 per cent of the country's electricity generation, according to a report from the Institute for Government. As a core energy source it also sets the benchmark for the wider electricity price.
UK natural gas futures had risen to about 120.7 pence a therm this week, up from around 78 pence a therm before the conflict began. Liquified natural gas production plants in Qatar and other parts of the Middle East have been attacked by missiles, while exports from the region are trapped in the Strait of Hormuz shipping corridor.
Energy exporter
Distributor National Gas said gas stocks in Great Britain are set to be sufficient to allow for some to be exported to mainland Europe this year.
Supplies extracted from the UK Continental Shelf and imports from Norway are expected to represent 86 per cent of total gas on hand.
The build-up of renewable energy capacity is set to provide a brief respite for the UK over the summer. In a windy period of late March, solar and wind also combined to squeeze more expensive gas-fired generation to just 2.3 per cent of the power mix.
Figures for the summer from National Energy System Operator forecast on Tuesday that the use of renewables such as solar and wind would see the UK emerge as an energy exporter before winter heating needs began.
Mortgage crunch
Rachel Reeves, the Chancellor of the Exchequer, has demanded lenders contact 1.6 million customers whose fixed-rate deals end between now and the end of the year. “The war in Iran is not our war, but it will come at a cost to the UK," Ms Reeves said on Tuesday. "These are not costs I wanted but they are costs we will have to respond to."
The IFG said this would create an interest rate crunch for many debt holders. "The Bank of England was expected to cut interest rates this year. It now has to try to balance the twin challenges of rising inflation and a slowing economy," the institute said. "The public finances will be affected by higher interest rates on new UK government debt as markets now anticipate relatively higher inflation and interest rates in future."
Ms Reeves has also reaffirmed basic protection for borrowers for anyone worried about their mortgage.
Defence demands
Senior defence figures warned that the government is already failing to deliver a promised rise in military spending, something made more urgent by the fallout from the Iran War.
It has promised to spend 2.5 per cent of gross domestic product on defence by 2027, increasing to 3 per cent after 2029 in the next parliament and a Nato-agreed target of 3.5 per cent by 2035.
It is tracking £28 billion below the trend line to meet those commitments, according to reports. UK Prime Minister Keir Starmer says the Defence Investment Plan to deliver the boost is on his desk for finalisation.
