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Nicaragua and Britain compared

In my last blog on the Nicaraguan energy price hikes, I noted that the Nicaragua of today could be the richer Western nations of tomorrow some years down the energy depletion slope.

Well, it was an 11.83% price rise in electricity tariffs that put the Nicaraguans on the streets in protests (although it only applies to the 25% who used more than 150Kw/h). Now note the situation in Great Britain where the biggest gas supplier, British Gas, is advising of 15% price rises in its gas prices. This follows on from rises of 5.9% and 12.4% last year.

In Nicaragua's case, their recent price hike has been due to their over reliance on burning oil for electricity generation. In Britain, it has been due to the depletion of indigenous gas reserves and the increased cost of now being a net energy importer like Nicaragua.

The BBC news article says that over 1 million customers were moved to protest over this. However, not in the form of a million man march to London or anything like that. Rather, they closed their accounts and moved to other gas providers.

Why the difference in reaction? First and most importantly, energy bills form a lower percentage of outgoings in Britain than in Nicaragua. I would say Britons spend about 5% of their income on energy bills. A search of the internet revealed a figure of 22% of average income for Nicaraguans' electricity bills. By way of statistics, the average GDP per capita for 2004 in Britain was about $27700 and $2300 for Nicaragua. Electricity use per head of population was 5740Kw/h for Britain and 444Kw/h in Nicaragua.

Secondly, the Nicaraguans could not simply leave their provider, since the State directs the retailing and distributing of gas and electricity supplies. But with their total dependence on importing energy, that may not have proved to have been a solution. Britons who switched from British Gas will find that other providers have no choice but to raise retail prices in the face of 50% hikes in wholesale prices.

So when can we expect the Brits to take to the streets on the other side of Peak Oil? Going by Nicaragua, no later than when energy bills are 20% and not 5% of income. And remember that this does not requires gas and electricity prices to quadruple. On the downward slope of Hubbert's Peak, incomes go down and not up in real terms as too many people chase too few jobs.

What do you think? Leave a comment below.

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