Why Haven't Prices Dropped?

1carminestocky

WelshGandalf wrote: »

Don't forget all the smaller suppliers who increased their prices at about the same time too!! They are all in it together!!!!!!! And to think they use the ridiculous excuse of their costs going up!!!!!!!!!!!!!!!!!!!!!! :rolleyes:

Seriously though, I don't know how to "fix" the market... I don't think any method is perfect. It seems that whenever something is owned by the government, people say a private company could do it better, and vice versa! At least private companies seem to be better at not losing personal data (excluding private companies working for the government, who tend to get chosen on offering the cheapest - ie worst service)

The current one isn't so bad as everyone makes out really, sure it's not perfect but I can't think of a better way of doing it. After all the suppliers don't have a direct influence on the price of oil which feeds through to their prices and has been the main upwards driver of prices. I was reading an old article not too long ago, written about 2001, and they were modelling carbon emissions, saying that the highest oil prices would go was $30 a barrel before returning to their long-term average of $20 They got to almost $150 a barrel earlier this year. That's pretty much why gas & elec it was cheaper back in the day.

I genuinely believe oil will get back to $25-$30 a barrel in 2009 due to the global recession. We will see what sort of downward pressure that has on gas and electric prices. If they manage to stay artificially high and out of step with all other industries then I hope OFGEM investigate again on possible cartel activity. How long before 'passive collusion' becomes something more serious?

melbury

reactor wrote: »

Yes whilst nationalised companies might have been a little less efficient, once private companies get their little cartels going they drive prices through the roof to 'as much as
the market will bear'.
If gas was nationalised we would not be paying these high prices.
Same goes for oil, no more than $30 a barrel.
Bring back Scargill

OMG NO!:eek: :eek: :eek: :eek: :eek:

melbury

1carminestocky wrote: »

I genuinely believe oil will get back to $25-$30 a barrel in 2009 due to the global recession. We will see what sort of downward pressure that has on gas and electric prices. If they manage to stay artificially high and out of step with all other industries then I hope OFGEM investigate again on possible cartel activity. How long before 'passive collusion' becomes something more serious?

Won't the big oil producing countries just get together and decide to cut oil production to artificially keep the price high?

BargainGalore

They already did so some weeks back and production is being cut in an attempt to increase prices

melbury wrote: »

Won't the big oil producing countries just get together and decide to cut oil production to artificially keep the price high?

1carminestocky

Apparently OPEC seem to be split on what the best sort of strategy is. Iran would cut oil production massively, for instance, in order to get the price up to what it was in July (they don't much care for the West but I'm sure you knew that and also they have been largely unaffected by the global financial meltdown), but countries like Saudi Arabia and Kuwait (Western-friendly or so they like to be seen to be) wouldn't agree to that sort of strategy.

mech_2

OPEC wouldn't let oil stay below $30 a barrel for very long. That's below the break-even point even for the Saudis. Iran breaks even at about $50, which explains why they're more keen to prop up prices now.

Obviously with the falls in the oil prices over the last week or so there have been faster falls in the UK wholesale gas market too. Already we see NPower has a new cheaper tariff, but I expect the lower prices won't feed through to existing tariffs until the falls are more substantial.

Plus I suspect they're waiting for a better idea of what the long-term outlook is going to be. If a company drops their prices too much, they're more likely to be the the one who loses the most customers next winter if the prices have to go up. Whoever puts up their prices first loses the most customers, so they will try and cut themselves some slack.