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Petrol Panic Grips London Ahead of Summer Games

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The British climate change secretary struck an upbeat tone in March on his country's track record in the campaign against climate change. The Department of Energy and Climate Change reported that CO2 emissions were down almost 10% in 2011 compared with the previous year. Though oil and natural gas production were down, renewable resources like wind and hydropower were gaining ground. Underneath that optimism, however, is a looming tanker-driver strike, petrol panic and a British economy stepping closer to the brink of a dreaded double-dip recession.

Edward Davey, the DECC's lead authority, sounded upbeat in his declaration that his country was leading the global pack in the fight against climate change with a reported 7 percent drop in greenhouse gas emissions.

"Carbon emissions are down, homes are more energy efficient and low carbon power is up," he said in a statement.

His department said that carbon dioxide emissions made up about 84 percent of the greenhouse gas emissions in 2010. The DECC, however, said it predicated an 8 percent decline in its provisional estimates for CO2 emissions for 2011 when compared with 2010 levels. Low-carbon energy forms of electricity generation, meanwhile, increased more than 5 percent during the same period with natural gas leading the way. Hydropower and wind increased by a whopping 55% in 2011 compared with 2010 levels.

More ominous, however, was the figure noting that coal still accounts for roughly 30 percent of the electricity generated in the United Kingdom. Oil production, meanwhile, declined by about 17 percent in 2011 compared with 2011. Production of natural gas, which was praised in the assessment of electricity, was down more than 20 percent and gross imports where greater than gross production for the first time in 45 years.

Darker still are the reports that the British economy slipped backed into recession. The Organization for Economic Cooperation and Development said the U.K. economy shrank 1.2 percent from October to December and should contract another 0.4 percent during the first quarter of 2012. Though British Chancellor George Osborne said he thought the OECD was a bit pessimistic, making things worse was the Friday decision from Washington that there was enough non-Iranian oil on the market to warrant additional sanctions against Tehran.

James Burkhard, managing director at IHS CERA, told U.S. lawmakers this week that geopolitical tensions were stressing global energy markets. Tightening sanctions on Iran, he said, is complicated by a decline in spare oil production capacity. In 2010, when the global economy was mired in recession, spare capacity stood at around 5 million barrels per day. While Europe has its problems, other national economies are improving, meaning spare capacity dropped to around 2.5 million bpd.

That spells trouble for London.

Back across the pond, the DECC said electricity bills were up 8.5 percent from 2010 levels and natural gas bills were up 9.3 percent. With U.S. consumers crying foul over $4-per-gallon gasoline, British consumers are in a state of panic with retail prices climbing more than 80 percent amid a tanker-driver strike. Sure, Davey is right to say that greenhouse gas emissions are in decline, but so is the rest of the country, it seems.

By. Daniel J. Graeber

Daniel Graeber is a senior journalist at the energy news site Oilprice.com. He is a writer and political analyst based in Michigan. More of his articles can be found on his Authors page at Oilprice.com

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