Three ways to secure our energy – but has the scramble started?

If a week is a long time in politics then five months is so long that the policies that were espoused then as solutions are as odd to us as those that were offered a hundred years ago.

It was only a month ago that our Foreign Secretary, David Miliband made an important speech at the London School of Economics. Mr Miliband is one of these very bright people who went to Oxford where he studied Politics Philosophy and Economics and his subsequent career has been exclusively in politics, as far as I can gather.

He argued in his important speech that there was a “resource crunch” which has led to prices of fuel and food rising tremendously.

How much stock of energy should we hold?

If you run a business you know that the stock that you hold (known in the US as inventory) is critical to the success of your business. The more stock that you hold the more capital you have tied up; in some businesses stock decays with time (such as food) or becomes less valuable by becoming unfashionable or out of date. You try to avoid buying stock that you cannot sell.

 

These factors have led most businesses to manage their stock carefully; they need enough to keep their customers satisfied but not so much that they do not have enough money to pay all their bills. So over the years, using computers and all the efficiencies of modern businesses try to get their stocks just in time to sell it when needed, because “just in time” is the most profitable way to handle it.

 

Generally speaking energy companies have tried the same approach with their stocks of fuel for the same reasons. As a nation the way our energy is organised the level of the stocks of fuel that is held is dictating by business reasons, rather than what is in the national interest.