From the ninth-floor café near my apartment, I observe a nation rising out of poverty, its income still well below Wales’s but living far better than in the recent past. In Wales, I see a declining economy, unprepared for an imminent crisis that may permanently crush living standards.
Below me, a ship is moored at Dili’s oil pipeline jetty. She’s the Jian Hang Feng Da, 99 metres long, 16 metres wide, flying the Chinese flag. Before her came the Singaporean Bliss, back for the second time since I started keeping notes. A few weeks ago, we had the Blue Phoenix, registered in Panama, able to carry 4.5 million litres of oil.
The mothership, the Ocean Pride, is still anchored offshore. She’s riding much higher in the water now, revealing the red hull below her Plimsoll line. The deliveries of her cargo – refined oil – continue intermittently, as these smaller ships bring it to shore.
Sovereignty means preparation
The important things about sovereignty are that you have it, and what you do with it. The Timorese government is pragmatic. I’m not so sure about the Welsh. In my last article I described how Timor-Leste identified the onrushing oil shock early on and took action, allocating US$168.8 million to secure 80 million litres of fuel while the price was still low. Welsh politics, however, still behaves as if it’s business as usual, when the assumptions on which the economy rests are changing rapidly. Our politicians, in contrast to Timor-Leste, aren’t preparing for what’s coming.
The economy is energy
Because the economy is energy. Without a continuous flow of fossil fuels, there is no economy in Wales.
After the US and Israel attacked Iran in February, commodity exports from the Persian Gulf region fell precipitously. Inventories of oil stored elsewhere, including in the US Strategic Petroleum Reserve, have held prices down. But withdrawals are now reaching their practical limits. While the price of a barrel of oil is currently between $82 and $89, we can expect that to rise dramatically soon.
Which means Plaid Cymru has formed a government at the worst possible time. As I predicted a year and a half ago, austerity is going to be the new normal – but it’s going to be more brutal than I imagined, and it’s going to be introduced by a Plaid Cymru government. If Rhun ap Iorwerth and his colleagues don’t manage this with the greatest skill, their government risks crippling Welsh nationalism for generations to come.
It looks, as I write, as if the closure of the Strait of Hormuz will be a long-term reality. At home, there’s been turmoil at Westminster, with Starmer out and Burnham coming in.
When the shock reaches Wales
Where does all this leave Wales? With Middle Eastern oil and gas blocked and Russian energy sanctioned, European countries are competing in a global market for limited supplies that are about to become much scarcer. Operating diesel vehicles will be very expensive. That means ambulances. Buses. The lorries delivering food to supermarkets. And it’s not just fuel. It’s engine oil and other lubricants as well, pushing up the cost of maintenance. That price increase will be passed on to consumers and, in the case of the NHS, to the Senedd budget.
Household energy costs will go up. The October Ofgem cap, set in August, will mirror months of crisis-driven market prices. If the Strait is still closed in December, all bets are off for the January cap. Welsh households should plan for eye-watering energy bills next winter. Schools, hospitals, care homes, and universities will see their running costs rise enormously.
And the rising cost of jet fuel, and of living costs in developing countries, means that many aspirational middle-class families in Asia and Africa will decide not to send their children to Welsh universities; worsening already severe financial problems.
Food, farms and fragile supply chains
Fossil fuels from the Middle East provided fertilisers as well as tractor fuel. Even before the war, British farmers were concluding that it didn’t make financial sense to plant crops any more. Now, Welsh farms will struggle to survive.
Can we import more food instead? The crisis hit at the planting season worldwide; there will probably be a global food shortage and hunger beginning next winter. Demand will push food prices much higher. Oil and gas are also the basis for plastics; processing and packaging food is now much more expensive – with fresh, chilled and frozen foods at greatest risk of supply disruption. Making things worse, bunker fuel – the heavy oil that powers shipping – is also rising in price, which will add to the cost of all food products arriving in the UK by sea (including animal feed; another hit for farmers).
The NHS will not be spared
Two years ago I wrote about shortages of medicines in Wales. By January 2026, aspirin was widely unavailable. The global pharmaceutical industry is now taking a beating at every level: shortages of basic chemicals are hitting manufacturing, distribution and packaging; the shortage of plastics affects gloves, masks and syringes. Doctors will, in the coming months, have no medicines to prescribe. The crisis has also taken a large part of the world’s helium off the market, which makes operating the NHS’s MRI scanners a lot more expensive. Helium is also essential to produce computer chips, so the NHS is competing for remaining supplies with deep-pocketed microchip manufacturers.
These are just the obvious consequences; many more will undermine Welsh society, but I don’t have the space to discuss them here.
The fact remains: the cost of living in Wales is going to rise to levels we couldn’t have imagined even recently. Public services will become unaffordable – not only because of the energy crunch but because Westminster is determined to increase military spending; a reserved field. That increase won’t show up in the Welsh budget, but the diversion of funds from other ministries will cause cuts in the funds allocated to the Senedd. A lot of government jobs and benefits programmes will disappear.
Plaid’s difficult inheritance
Plaid Cymru isn’t responsible for any of this, but they will be held responsible all the same. I see two ways for them to respond.
The first is that they continue as they have since 1997: working within the British state in the way they know best, which too often, in my view, seems to be their comfort zone – at a time when that state’s underlying economic assumptions are collapsing. Writing reports about independence but doing little that moves the Overton Window towards it in the public mind. Trying to keep our society and economy going in a way that’s no longer possible.
That, I fear, will kill off the dream of a sovereign Wales. The independence movement will be tied to the collapse in living standards on their watch.
Independence in an age of limits
The second? They’ll finally have to persuade the public that a sovereign Wales could provide a good life for its citizens within the far tighter energy limits that will be the new normal: a Wales that can’t support many of the services and benefits we now take for granted. An independent Wales that would benefit the remaining working class and a smaller, increasingly precarious middle class alike.
It’ll be tough. But the energy crisis is coming, and it’s Plaid Cymru that will have to manage it. How well they do that will shape the future of Wales.
More from Emlyn Phillips
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