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Natural resources must be used to combat fuel poverty and aid the exchequer – Ferris

3 February, 2009 - by Martin Ferris TD


Speaking in the Dáil this evening on a private members motion on energy prices, Sinn Féin spokesperson on communications, energy and natural resources Marin Ferris T.D. called on the government to utilise all the natural resources of the state in order to combat fuel poverty and to aid the exchequer. Deputy Ferris said fuel poverty in Ireland is unacceptably high and is affecting families on marginal incomes and elderly people most.

Deputy Ferris said, "Energy costs are obviously crucial to both domestic and commercial users and as the motion points out while the steep increases in prices charged to consumers last July, of 17.5% on electricity and 20% on gas, were justified on the basis of previous increases in the global price for oil, the even greater fall in the price of oil per barrel since the Summer has not been passed on to the consumer nor has there been any indication that it will be.

"Families on marginal incomes, and particularly elderly people, are most affected, sometimes to the extent of having to go into further debt in order to heat their homes, and it was estimated that there were in the region of 2,800 excess deaths per annum in the island of Ireland due to deficiencies in households being able to meet their energy needs.

"There is a massive scope for wind and wave energy production in particular which would not only help to meet that target but more importantly contribute to the economy at a time of severe downturn. And yet there is little indication that the necessary attention is being paid to those areas."

"Minister Micheál Martin also referred recently to the ongoing delay in bringing ashore the gas from the Corrib field and pointed to the boost which that would have for the economy and at a time of global uncertainty regarding supply and pricing.

"Undoubtedly the bringing ashore of the Corrib gas - with an estimated value of billions of Euro - would be beneficial but there are major question marks regarding whether that would be the case given the current licensing terms which apply. There is also the fact that at present only 18 of the 26 counties in the state are connected to the Natural Gas network and that the Corrib pipeline as currently projected will not supply most of those living in the immediate region.

"Apart from that there is the whole area of taxation and royalties and the fact that this state will gain little or nothing in real terms in comparison to the revenue flows that play such a big part in sustaining a successful economy like Norway. For example, the Norwegians have a state pension fund of 240 billion dollars, largely built from oil and gas revenues. During the first nine months of 2008 -while the rest of the world's economies were reeling under the impact of the stock market and bank crisis - the Norwegian Government earned 18 Billion dollars in royalties from their oil and gas.

"However, there has been little indication that this Government or its predecessors have any intention of seriously addressing all of that as it specifically relates to Corrib." ENDS

Full text of Deputy Ferris' speech follows:

I support the main points contained in this motion but would also like to indicate that Sinn Féin supports the Labour Party amendment regarding the transfer of ESB assets to Eirgrid. As I have said on previous occasions when this has arisen there appears to be no argument for this other than to prepare the ground for privatisation and the entry of people into the electricity generation market who will cherry pick areas where they believe they can make a profit at the expense of the overall service. It is also worth reminding ourselves that the ESB was only established under public control in the first instance because private enterprise was unable or unwilling to invest in it.

Energy costs are obviously crucial to both domestic and commercial users and as the motion points out while the steep increases in prices charged to consumers last July, of 17.5% on electricity and 20% on gas, were justified on the basis of previous increases in the global price for oil, the even greater fall in the price of oil per barrel since the Summer has not been passed on to the consumer nor has there been any indication that it will be.

The impact of the increases for domestic consumers has been particularly severe in many instances. An Institute of Public Health study in 2007 already stated that fuel poverty in this country was at an unacceptably high level by international standards and that situation has been exacerbated by last years price increases.

Families on marginal incomes, and particularly elderly people, are most affected, sometimes to the extent of having to go into further debt in order to heat their homes, and it was estimated that there were in the region of 2,800 excess deaths per annum in the island of Ireland due to deficiencies in households being able to meet their energy needs.

The most alarming aspect of studies on fuel poverty here is that rates of fuel poverty were increasing even over the years of highest economic growth and that the level of household income below which families were finding it hard to meet their energy needs was rising steeply. An indication obviously that energy prices and the relative proportion of household income required to meet their needs was rising at a faster rate than most other essentials.

I would therefore support the proposal in the motion that the Energy Regulator conducts an immediate review into the prices being charged by the electricity and gas suppliers with a view to passing on the more favourable situation regarding global energy prices to the consumers, both domestic and commercial.

One area where more emphasis should be placed, particularly if the target for 2010 of renewable energy meeting 15% of demand is to be met, are the sources of alternative renewable supplies. There is a massive scope for wind and wave energy production in particular which would not only help to meet that target but more importantly contribute to the economy at a time of severe downturn. And yet there is little indication that the necessary attention is being paid to those areas.

The same applies to the production of energy crops in which very few farmers are involved although it has increased from a low base in recent years with ambitious targets for wood energy tied to local processing. That also requires more investment and development which will be harmed by the recent Budget cuts to Teagasc.

Minister Micheal Martin also referred recently to the ongoing delay in bringing ashore the gas from the Corrib field and pointed to the boost which that would have for the economy and at a time of global uncertainty regarding supply and pricing.

Undoubtedly the bringing ashore of the Corrib gas - with an estimated value of billions of Euro - would be beneficial but there are major question marks regarding whether that would be the case given the current licensing terms which apply. There is also the fact that at present only 18 of the 26 counties in the state are connected to the Natural Gas network and that the Corrib pipeline as currently projected will not supply most of those living in the immediate region.

Apart from that there is the whole area of taxation and royalties and the fact that this state will gain little or nothing in real terms in comparison to the revenue flows that play such a big part in sustaining a successful economy like Norway. For example, the Norwegians have a state pension fund of 240 billion dollars, largely built from oil and gas revenues. During the first nine months of 2008 -while the rest of the world's economies were reeling under the impact of the stock market and bank crisis - the Norwegian Government earned 18 Billion dollars in royalties from their oil and gas.

However, there has been little indication that this Government or its predecessors have any intention of seriously addressing all of that as it specifically relates to Corrib.

There is also a lot of potential in other areas off the Irish coast. For example there are estimates, including one from the Petroleum Affairs Division of the Minister's Department that there are 10 billion barrels of oil lying off the west coast of Ireland, valued at over 500 Billion dollars at current prices. That is in addition to a natural gas reserve - estimated to be 50 trillion cubic feet - sufficient to supply the whole of Western Europe for some time.

200 kilometres off the coast of Kerry is the Dunquin gas field which is estimated to contain 25 trillion cubic feet of natural gas and 4,130 million barrels of oil. The gas alone would meet our gas needs - at present consumption levels - for the next 62 years. Dunquin is licensed to Exxon and partners who estimate that it will come on stream after 2013.

Off the coast of Clare there is the Spanish Point field with known reserves of one and a quarter trillion cubic feet of gas and 206 million barrels of oil, valued at €30 billion. That is hoped to begin production in 2011 with the gas piped ashore.

Again as with Corrib, this country would only fully benefit if the taxation and royalty regime is changed to redress the terrible deal made, for whatever dubious reasons, in 1992. Tax rates are extremely low and most of the current 25% tax on profits can be written-off against exploration and operating costs.

I appreciate that the Minister was successful in having a new rate of tax of 40% introduced but this rate only applies to new exploration licenses and doesn't cover the existing oil and gas licenses. It should be extended to all licenses to ensure that when the gas and oil comes on stream that it provides, as it can, a huge revenue boost to the country's energy needs and revenue with all the implications that would have especially during an international economic downturn.

There is also the potential that the development of oil and gas can have to establish security of supply. At present we import 85% of our energy needs. We are also at the end of a supply line that extends all the way from Russia across Western Europe, Britain and finally Ireland. The dangers of depending on that were highlighted recently during the stand off between Russia and the Ukraine.

In conclusion then I would like to support the motion along with the Labour Party amendment.

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