All eyes on the Strait of Hormuz, the 24-mile-wide choke point between Iran, the United Arab Emirates and Oman, through which moves, in normal times, around a fifth of the global supply of liquified natural gas and a quarter of all seaborne oil. But with Iran threatening to set fire to any ship in the strait, LNG production halted in Qatar after missile attacks, and gas stocks in user countries low at the end of winter, prices are soaring as they did at the outbreak of the Ukraine war.
You may hear it said that the UK is relatively well placed for this supply crunch because we import only a small portion of LNG from the Gulf and much more from the US and Norway; and because almost half of UK electricity now comes from renewables, with wind to the fore. But oil and gas still account for upwards of three-quarters of total UK energy use; electricity costs for UK business are driven not by renewable output but by global wholesale gas prices plus Ed Miliband’s green levies; and if the blockade holds, Ofgem’s price cap for UK domestic energy consumers could skyrocket in June.
All of which means inflation is coming and interest rates will stay higher, while markets wobble and investment and trade suffer. America stands to gain from oil and gas price spikes as a net exporter: its commander-in-chief’s duty to the rest of us, allies or otherwise, is to keep the strait open.
Substance-free
Chancellor Rachel Reeves’s Spring Statement was spun as a non-event and so it largely turned out to be, coming across like a months-old blame-the-Tories template to which only a brief reference to ‘investment in our armed forces’ had been added to acknowledge the outbreak of World War Three. A cut in the Office for Budget Responsibility’s 2026 growth forecast from 1.4 to 1.1 per cent made the only headline. As for inflation, it was OBR chief David Miles, not Reeves, who later admitted it could be driven sharply higher by an energy spike. As for business, there was nothing beyond a vague promise to ‘back the builders’. Really? Then accelerate promised planning and business rate reforms, reverse Labour’s catastrophic NIC hike and new workplace laws, and don’t make substance-free, cliché-packed statements that waste the nation’s time.
Paramount pyramid
The $111 billion takeover of Warner Brothers Discovery by Paramount Skydance, knocking out Netflix as a rival bidder, is the media deal of the decade so far. But will it deliver rich returns for its backers and a golden age for its viewers? I doubt it.
Barring regulatory blocks, the merger will create a vast complex of studios and streaming services, plus the CBS and CNN news operations. It’s a bad outcome for film-makers and writers, squeezed by economies of scale as well as the advance of artificial intelligence. But it has been hailed as a triumph for David Ellison, whose Skydance studio merged with Hollywood’s historic Paramount last year. And behind David lurks his scary father Larry, the tech veteran who vies with Elon Musk to be the world’s richest person and also happens to be a prominent supporter of Donald Trump.
The President will be delighted to see liberal CNN – which he obsessively accuses of making ‘fake news’ about him – fall under the control of the Ellisons; opponents accuse him of interfering to ensure that Paramount prevails. Observers on both sides of America’s political chasm see a Paramount-Warner marriage as a landmark of the illiberal billionaire-Trumpist hegemony.
Then again, modern media history is strewn with the wreckage of ego-driven mega-mergers, supposedly designed to marry content makers with delivery channels. Worst of those cautionary tales – one of the most value-destroying deals ever done in any industry – was the dotcom-boom take-over of Time Warner by the internet pioneer AOL at the turn of the century. More recently,
the telecoms giant AT&T’s 2018 acquisition of the diminished Time Warner was an expensive flop, out of which came Warner’s 2022 tie-up with the reality television maker Discovery.
Seen in that perspective, Paramount-Warner may turn out to be a tottering pyramid of hubris, while Netflix continues to thrive. And Google will laugh at them all, having done what really was the deal of the century way back in 2006, when it bought YouTube – then a modest video-sharing start-up, now the greatest threat to mainstream media – for a bargain $1.65 billion.
Terra incognita
On the eve of Labour’s northern by-election wipeout, I find myself briefly lost in the party’s last southern heartland, Islington. Close by Emily Thornberry’s constituency office I find the Drapers Arms, where deafening noise suggests early drowning of sorrows. In one corner, the veteran Observer columnist William Keegan holds court, perhaps reminding disciples that both Maynard Keynes and Gordon Brown were more right than wrong. My own host tucks into orzo with tofu as he enumerates the forgotten virtues of Tony Blair, including a new one to me, that he made Britain ‘a place where it was OK for men to talk about their feelings’. My hostess makes the same menu choice and recalls the charm of Peter Mandelson as a dinner guest in better days.
All political projects have a limited life, I’m thinking – as I tackle a bloody lamb chop – even maverick presidencies and theo-cratic dictatorships. But the slow-motion collapse of the gleamingly self-confident Labour construct of a generation ago is spectacular, bordering on tragic. Somehow I’m reminded of the current BBC adaption of William Golding’s Lord of the Flies. Sir Keir Starmer is Piggy, myopic and doomed; Reform are the horrid choirboys; the Greens are the jungle creatures who add colour but probably don’t change the plot. And the grown-ups are all gone.
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