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Eat or heat - the choice facing millions

As energy and food prices soar, jobs and services disappear and incomes are cut, it amounts to the worst assault on living standards in living memory.

For the 2.4 million households affected, the price of gas supplied by Scottish Power will increase by 19% on 1 August and electricity will go up by 10%. Other energy supply companies are expected to follow Scottish Power with similar increases in the wake of a 30% increase in wholesale prices since November 2010.

Annual household energy bills are expected to rise by up to £200 to £1400 this year, hitting those on low incomes hard, and British Gas is warning that wholesale prices are expected to rise a further 25% this coming winter. With food prices rises also accelerating – a typical basket has risen close to 5% in the last year – many pensioners already have to choose between eating and staying warm, and some will have to forgo both this winter.

Whilst across the world inflation is cutting into incomes and enraging millions, opinion leaders for rich investors are building the case for much worse to avoid the catastrophic consequences of having to admit bankruptcy by Greece or allowing debt default by the USA which is threatened for 2 August.

As the inflationary US money-creation quantitative easing programme runs into the sand, having failed to bring about a recovery, Glenn Hutchins, co-founder of investment company Silver Lake, and vice-chairman of the Brookings Institution says "The time is long past for 'rosy scenarios' which the markets won’t believe. Hard choices will have to be made." And these include dramatic cuts in government spending programs combined with savage tax increases.

Meanwhile, the oil-producing countries that belong to OPEC and control 40% of world supplies are meeting to consider increasing production or maintaining high prices whilst every NATO bomb that hits Tripoli keeps high-grade Libyan oil under the ground and drives world oil prices higher.

The Arab Spring uprisings has terrified autocrats in oil-producing countries – Saudi Arabia in particular. The Saudi monarchy, for example, hope they can cling on to power by appeasing their populations with public spending programmes – and claw back the money by raising the price of their oil. Forecasters say that oil prices will not drop below $80-$100 a barrel for years to come. They could even rise to $130-$140 – with huge effects on the world economy which relies on oil for 30% of its energy needs.

And with oil the most critical commodity for capitalism after labour, the higher the price of oil goes, the lower wages and benefits – the price of labour – must fall, if profits are to be maintained.

Some are calling for energy companies to open their books to explain the need for price increases when Scottish Power, owned by Spanish company Iberdrola, made £1.3bn profit in 2009/10. Southern Energy made £2.1bn.

Norman Kerr, of the Fuel poverty charity Energy Action Scotland, says rightly that "It is time to recognise that being able to heat and power the home to an adequate level at a price that is affordable is an essential part of everyday living and we cannot continue to pile more on to fuel bills and push more people into fuel poverty."

For the majority of the world’s population there’s only one choice: to take the energy companies into social ownership and end the for-profit system once and for all.

The rising price of basic necessities – fuel in particular – is a common factor that can potentially unite ordinary people’s struggles around the world. Protecting the vast oil and oil resources in countries from the corporate raptors and their war-mongering representatives in government is vital. Bringing energy sources under the control of popular assemblies to be used in a not-for-profit way offers a way forward. Then, collectively, people’s assemblies can begin to plan safe use of oil and natural resources to meet needs and restore the planet’s ecosystem.

Gerry Gold
Economics editor
8 June 2011

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