Economist Says the Quiet Part Out Loud: High Energy Prices are ‘Good for the Climate’

When petrol prices rocket because of supply shocks — such as the closure of the Strait of Hormuz and the rerouting of oil tankers — one might have expected a discussion of geopolitics, market signals and the obvious supply-side remedies. Of which there has been plenty, some competent and even masterly, some not so competent analyses by ‘instant expert’ talking heads in social and mass media. But a recent article by an economist in the Conversation offered a solution so perversely tone-deaf it could have been lifted from a Babylon Bee satirical script.

Citing research that a 10% rise in UK petrol prices can cut demand by up to 5%, the piece solemnly declared that “high prices are a way of adjusting consumption to cope with the lower supply”. The subtext was unmistakable: with refined products suddenly scarcer, the proper response is not to produce more fuel (where the country is blessed with domestic fossil fuel resources, like the UK) or to import more from sources outside the Strait of Hormuz or both. Instead, the advice from Christoph Siemroth, Senior Lecturer in Economics at the University of Essex, is to make what little remains even costlier — so that the hoi polloi drive less, take the bus and hasten the glorious transition to Net Zero.

Clueless and insidious

One is reminded of Marie Antoinette’s famous cake remark, betraying aristocratic cluelessness. But the Conversation article is something far more insidious: the capture of economics itself by the green ideology that now rules our institutions from the BBC to the Treasury, from Oxbridge common rooms to the UK Met Office service. The discipline that once stood as the last redoubt against the Frankfurt School’s long march through the social sciences has fallen. Frank Knight, Gary Becker, George Stigler, Milton Friedman et al. held the gates against postmodern gibberish for a generation. No longer. The barbarians are inside the citadel, wearing lanyards from the oxymoronically named Department for Energy Security and Net Zero, chanting ‘sustainability’ like a secular rosary.

Consider the elementary logic that every first-year economics student once absorbed before the PPE types at Oxford and Cambridge began their higher education in Gaia worship. When the price of a good rises because of scarcity — whether from a blockade in the Persian Gulf or an OPEC production cut — the signal is unambiguous: produce more, explore more, innovate more. Britain sits atop some of the richest hydrocarbon resources in Europe. North Sea oil and gas reserves are not physically exhausted; they are made economically infeasible in the face of Miliband’s punitive tax rates.

Onshore shale, barely scratched after a decade of regulatory vandalism, could transform our energy security if the ‘precautionary principle’ were not treated as holy writ. Higher prices should, in any sane world, trigger precisely that response: more drilling, more fracking, more investment in refining capacity, more imports of oil and gas from diversified suppliers. Instead, our green economists prescribe the economic equivalent of putting a feverish patient into a sauna. Demand must fall. Prices must stay punishingly high. The suffering is the point.

The Conversation piece is exemplary in its genre. Price caps are correctly dismissed as distortionary, leading to physical shortages and queues as a means of rationing. One needs to only remember the long lines at gas stations in the US under Jimmy Carter’s price controls after the 1979 oil price shock.

Roughly 50-55% of the UK retail price for both petrol and diesel currently goes to the Government as taxes. But fuel duty cuts are rejected because they are untargeted and cost the Exchequer revenue — fuel duty, after all, is nearly 2% of government income, a nice little earner for the Net Zero industrial complex. The preferred remedy? One-off cash transfers to low-income car owners, modelled on Germany’s 2022 gas rebate which provided a temporary fuel tax cut in 2022 to ease soaring petrol and diesel prices during the energy crisis triggered by Russia’s invasion of Ukraine.

The beauty of this, we are told, is that it preserves the ‘price signal’ while letting households ‘profit’ by leaving the car at home. Translation: we will bribe you to stay poor and immobile, all in the name of the planet. Meanwhile, the authors of such wisdom never feel the pinch. They lecture the white van plumber, carpenter or electrician going about his work and the hard-pressed mother doing the school run that their higher fuel bills are a feature, not a bug.

Luxury beliefs and intellectual corruption

These are luxury belief-made energy policies which confer status on the upper class at very little cost, while often inflicting costs on the lower classes. As Victor Davis Hanson has so often pointed out, Leftist policy elites in Democrat-run states suffer little from the consequences of their own policies. For example, the metropolitan elite’s enthusiasm for open borders stops abruptly at the high walls of their own villas.

The same applies to energy. Inhabitants of the liberal metropolitan bubble can afford the £12-an-hour parking in Covent Garden, the retrofitted Victorian terrace with an air-source heat pump the size of a small car and the Tesla whose real environmental cost is buried in Chinese lithium lakes and in artisanal cobalt mines using Congolese child workers. For them, ‘sustainability’ is a lifestyle brand. For the rest of the country — pensioners choosing between heating and eating, hauliers facing bankruptcy, farmers unable to run their tractors — it is economic sadism dressed up as virtue.

The historical parallel is instructive. E.F. Schumacher, the ‘Buddhist economist’, told us, “small is beautiful” and that giant power stations were somehow spiritually corrosive. One wonders what he would make of the fact that a modern combined-cycle gas plant needs to be at least 200 MW to be remotely efficient, or that industrial civilisation runs on economies of scale, not backyard steel furnaces.

Yet today’s green establishment is repeating the Maoist folly in Western drag: decentralised ‘community energy’, intermittent wind and solar that require massive subsidies and backup gas plants, and an ideological insistence that the optimal size of an economy is whatever fits the carbon budget decreed by ‘climate modellers’ in Exeter or East Anglia. The Soviet Union tried to create the New Soviet Man — selfless, collective-minded, liberated from base material desires. The project failed spectacularly. Its successor is the New Green Man, who measures his carbon footprint, cycles to the vegan restaurant and cheers when Ed Miliband shuts down another North Sea field. The totalitarian impulse remains; only the vocabulary has changed from ‘proletarian internationalism’ to ‘just transition’ and ‘climate justice’.

The intellectual corruption runs deep. Paul Krugman, a Nobel laureate in trade theory, now produces columns that read like press releases from the Church of Climate. Marginal costs of natural gas? Irrelevant when policy costs — carbon taxes, renewable obligations, network charges, capacity market payments — make up the lion’s share of your bill. As Kathryn Porter, David Turver and others have documented with forensic clarity, the ‘energy price crisis’ is largely a Net Zero policy-induced crisis. The wholesale cost of electricity is only part of the story; the rest is the deliberate layering of green levies and taxes that no classical economist would recognise as market-based. Yet we are told, with straight faces, that the ‘97% consensus‘ demands we accept this as settled science. The same consensus, one notes, that once assured us the pause in global temperature increase was impossible, that polar bears were doomed and that Himalayan glaciers would vanish by 2035.

Rupert Darwall’s Green Tyranny provides an insightful exploration into the origins of the climate industrial complex. The green movement’s roots lie not in empirical ecology but in a Malthusian revulsion against industrial modernity and a quasi-religious yearning for control. What to eat (less meat), how far to travel (fewer flights), what temperature your thermostat may reach (no more than 19°C if Whitehall has its way) — these are not technical questions but moral ones, policed by the new priesthood of economists who have traded the parsimony of Occam’s Razor for the abusive use of the precautionary principle (‘better safe than sorry’). Uncertainty is weaponised asymmetrically so that minor or hypothetical risks (e.g. induced seismicity from fracking) trigger paralysis, while the far larger risks of alternatives are downplayed. The precautionary principle becomes a de facto veto tool for ideological opposition to hydrocarbons, not genuine risk management.

Homo economicus, the rational maximiser embedded in cultural norms that Adam Smith understood in both The Wealth of Nations and The Theory of Moral Sentiments, has been replaced by Homo Climaticus: a creature whose every decision must be subordinated to the carbon ledger.

The consequences are not abstract. Britain’s energy prices are among the highest in the developed world precisely because we have chosen ideology over geology. While China adds coal-fired capacity equivalent to the entire UK grid every few years and India builds out its fossil infrastructure without apology, the West hectors the Global South about Net Zero and wonders why BRICS+ nations hedge their ‘policy commitments’ to UN forums such as the COP30 conference in Brazil. The multipolar realignment is not just geopolitical, it is energetic. The Rest have noticed that the West’s Net Zero experiment is self-inflicted economic suicide. They intend no such folly.

Glimmers of hope or barbarians at the gates?

Yet there are glimmers of hope. The tide is turning, as Matt Ridley explains in his recent Clintel lecture ‘The Climate Parrot is almost dead’. Ridley argues that public and political momentum behind the ‘climate emergency’ narrative is weakening. Indeed, public tolerance for green virtue-signalling has limits when the bills arrive. The on-going protests in Ireland over the cost of fuel by farmers, contractors and others have been massive, leading the Government to place the army on ‘standby’ as nationwide fuel protests continue to cause significant disruption and threaten critical supplies across the country. The military’s potential involvement comes as blockades outside major fuel depots intensify, prompting a dangerous Government shift towards an ‘enforcement’ phase in response to the escalating crisis. There are indications that these protests are spreading to Norway and France, as farmers and truckers there block arterial roads with tractors and trucks.

Populist movements across Europe and the United States are demanding energy realism: all-of-the-above policies that include nuclear, gas and yes, even beautiful, black coal, where geology and economics dictate. The Chicago School may have been breached, but it is not yet razed. Rigorous economists — those still willing to follow the data rather than the grants — continue to point out that adaptation and technological progress have always outpaced apocalyptic forecasts. The ‘climate emergency’ that justifies Soviet-style rationing by price is, on closer inspection, a political choice, not a scientific imperative.

Economics was once the most parsimonious of the social sciences, cutting through trite views with marginal analysis and revealed preference. When it abandons that discipline for the higher calling of Gaia worship, it ceases to be economics and becomes propaganda. The article in the Conversation is not an aberration; it is a symptom of a discipline that has exchanged truth for tenure and rigour for righteousness. The barbarians did not storm the gates. The Western elites invited them in, gave them chairs and asked them to redesign the curriculum.

The corrective will not come from more white papers or behavioural nudges. It will come when voters — those whose lived experience of green policy is higher bills, colder homes, and slower journeys — demand an end to the experiment. Ireland is in tumult as we speak. Energy abundance is not a luxury; it is the foundation of modern civilisation. To pretend otherwise is not sophistication. It is civilisational self-harm. And the bill, as always, lands on the people least able to afford the eco-crucifix.

Dr Tilak K. Doshi is the Daily Sceptic‘s Energy Editor. He is an economist, a member of the CO₂ Coalition and a former contributor to Forbes. Follow him on Substack and X.