As conflict spreads across the Middle East, Brent crude has risen from around $60 a barrel to about $76, an increase of more than 25%. Some analysts warn that if tensions escalate further, prices could approach $100. Natural gas prices have also jumped sharply, with European futures rising by more than 30% in a short period. Oil and gas are moving together. Markets are repricing geopolitical risk. When the risk premium rises, transport costs rise, generation costs rise, and electricity bills follow.
The impact of gas prices on electricity markets is particularly direct. In Britain and much of Europe, wholesale power prices are set by the marginal plant — often a gas-fired station. When gas prices spike, electricity prices are pushed up, even if the cost of wind and solar remains unchanged. This mechanism was brutally clear during the 2022 energy crisis. Today’s oil and gas surge is a reminder that the structure has not fundamentally changed.
In this context, some critics argue that net zero policies and renewable expansion are to blame for high electricity prices. They claim that the energy transition is the culprit. This diagnosis is wrong. The immediate cause of rising prices is geopolitical instability and supply risk, not the development of wind and solar. The real question is not whether the transition exists, but whether conditions would be worse without it.
This is where counterfactual analysis becomes essential. A counterfactual is not a simple comparison between now and the past, nor is it a crude comparison between one country and another. It asks us to compare two possible worlds. In one world, over the past decade, we invested heavily in wind and solar and reduced dependence on fossil fuels. In the other, we did not. The relevant question is not why prices are rising despite renewables, but whether prices would be even higher without them.
Research from University College London has shown that the expansion of wind power in the UK has reduced wholesale electricity prices and saved consumers billions of pounds over recent years. During periods of high gas prices, wind generation has acted as a buffer. Without that additional wind capacity, electricity bills and government support costs would have been significantly higher. That is what a proper counterfactual comparison reveals.
Climate sceptics focus on the fact that prices are high even with renewables. But they fail to ask whether the shock would have been larger without them. Global fossil fuel supply remains concentrated in regions dominated by authoritarian regimes. Price risk and political risk are intertwined. Dependence on those supplies is itself a structural vulnerability.
Energy policy is ultimately about risk management. Wind and sunlight are domestic resources. They are not subject to embargoes, sanctions, or conflict. Building renewable capacity requires capital investment, but once installed, marginal costs are close to zero. Fossil fuels, by contrast, require continuous purchases at prices determined by global markets and geopolitical tensions. This is not an ideological debate. It is about exposure to volatility.
If oil prices do approach $100 again, the lesson will not be that the transition has gone too far. It will be that we have not gone far enough. The problem is not transition. It is overdependence on fossil fuels. Every surge in oil and gas prices is a reminder that energy security and price stability depend on accelerating the shift toward locally produced renewable energy, rather than remaining primarily reliant on fossil fuels produced in politically unstable parts of the world.
