Daventry U3A columnist counts cost of living crisis and how UK has been hit hard by energy prices

Here's the latest Our Generation column, supplied for The Gusher by Daventry U3A members.

By Lucie Green
Friday, 21st January 2022, 10:44 am
18th January 1972: Miners' wives wearing placards to complain about their husbands' pay and supporting their strike outside the Houses Of Commons in London.
18th January 1972: Miners' wives wearing placards to complain about their husbands' pay and supporting their strike outside the Houses Of Commons in London.

This latest piece has been suppplied by Lyn Puleston.

Lyn was born in 1937 and lives in Daventry District. He is married to Brenda and they have two children.

For the past 30 years the average rate of inflation has been about 2.5 per cent, and over the past 10 years the average rate has been lower than that at about 2 per cent. So, we have got used to relatively stable prices.

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Lyn Puleston.

Now, quite suddenly, we are seeing rather higher rates of inflation of more than 5 per cent.

This is more than double what we have been used to.

This has been caused by a recent increase in global demand for raw materials and finished products, and also in for oil and gas.

Over the past six months the cost of fuel - especially gas - has risen dramatically.

This affects everything we buy.

To start with it affects the cost of transport. Shipping, air freight, and distribution have increased in cost which is passed on to the consumer. Manufacturing, agriculture and domestic heating are all affected by these increased costs.

Why has this come about?

There are several contributing factors. These are:-

2020-21 winter in Europe was particularly cold, and stocks of fuel were run down. This was followed by a relatively calm and windless summer, which resulted in fuel stocks being used up rather than being replenished. There has also been high demand for liquified gas in Asia and in particular in China.

The UK has been hit hard because gas provides 85 per cent of our domestic heating. Also there has not been sufficient storage capacity to meet with shortages. We have traditionally relied on just in time supply.

Those of us who are of the older generation will remember during the 1970s when inflation averaged about 12.5 per cent, peaking for a short time at 25 per cent in 1975. This was again due to a large increase in the price of fuel, in particular oil, and also coal. This was before we had North Sea oil, and when coal provided about 40 per cent of our energy needs.

On October 6, 1973, the Egyptians launched an attack on Israel. The Syrians joined in. After two weeks the Egyptian army was soundly beaten, and the Israelis occupied more of the Golan heights.

This was a humiliation for the Arab world and in retaliation the oil-producing nations (OAPEC) embargoed the USA because they, and some western nations, had supplied arms to Israel. As a result, the price of crude oil quadrupled.

This affected the consumer nations, including the UK. At the same time the coal miners, taking advantage of the situation, went on strike for higher wages, turning down a 13 per cent increase. In the 1970s the trade unions were very strong and there were many strikes for increased wages which resulted in higher prices of goods for the consumer with consequently relatively very high inflation.

At the end of the decade the Islamic revolution in Iran brought about another spike in the price of oil. In the UK we experienced a winter of discontent when public employees and lorry drivers went on strike for excessively high wage increases.

The (Labour) government refused to meet their demands.

Rubbish was uncollected, bodies were left unburied, streets were not swept and roads were left untreated. In March the government resigned after losing a vote of no confidence.

After a general election the Conservatives were returned with Mrs Thatcher as Prime Minister. But that is another story.

What we experienced in the 1970s was but nothing compared with the hyperinflation in Germany in 1923 when the mark devalued to such an extent that you needed a barrow load of paper money to buy a newspaper.

The exchange rate for the mark was a trillion to the dollar.

This was brought about by the French government occupying the Ruhr because Germany had defaulted on paying war reparations.

Will inflation rises hit you hard? We'd like to hear from you. Email [email protected]