Gas Prices, CO2 and Australia
My weekly news bulletin looking at A level politics related stories.
Gas prices and CO2
I have been saying for some time that the current Conservative leadership, unlike that of previous goverments, is more inclined to intervene in the economy. This was seen yesterday when the Johnson government stepped in to save a carbon dioxide company that had stopped production because of the steep rise in the price of gas.
The government will meet the full operating costs to run CF Industries' Teesside plant for three weeks. US-owned CF Industries recently shut two sites that produce 60% of the UK's commercial carbon dioxide supplies. CO2 is needed for food, farming and drinks production.
It is an extraordinary move by a conservative government, but it stopped short of nationalising the industry.
Why has it happened?
Wholesale prices for gas have surged 250% since January, with a 70% rise since August alone. This has made companies like the US CO2 supplier uncompetitive. The move means the government is willing to subsidise a private company that can no longer survive.
Energy price cap
The Conservatives (after ridiculing ‘red’ Ed Miliband and the ‘socialist’ Jeremy Corbyn when they talked about it, have also introduced an energy price cap. This means that suppliers have a maximum limit on how much they can charge for gas and electricity.
The cap is also an ‘intervention’ in the marketplace. Thatcherism is all about allowing the least amount of regulation and unleashing free markets and competition.
Together with the tens of billions already spent on the furlough scheme and other employment subsidies, this is the most interventionist conservative government for decades.
How can you use this information?
If you were asked to write an essay on whether the Conservatives are still a Thatcherite party, you can contrast this government with previous ones.
Global news - a new security pact is formed
The Aukus alliance is an agreement announced between the United States, Australia, and the United Kingdom. It is a long-term security arrangement, but the one concrete announcement thus far is a plan to help Australia upgrade its submarine fleet, controversially by upgrading the technology that powers it – from diesel-powered to nuclear-powered. There are only six countries that currently operate these submarines so Australia would be joining an exclusive club.
Although neither country in the agreement has explicitly said so, its context is the rising influence of China, strengthening Australia’s security will act as a check on the rising Pacific power. The British have downplayed this dimension to the agreement, but it is clear this is how the Americans see it.
The French are angry
The French had previously signed an agreement with Australia to build 12 conventional submarines worth $36bn (US), only for this new alliance's deal to lead to the cancelation of that contract. It is believed the French found out like everyone else when it was announced to the world. France recalled its ambassadors from the US and Australia and called it a ‘stab in the back’.
After the bungled Afghanistan operation, again this raises questions about whether Biden’s America is really as multilateralist as it makes out - or whether this is America first but in a calmer tone.
Must read: Why Aukus is welcome in the Indo-Pacific
(Remember all students have free access to the FT)