oil prices below $50 a barrel!! still no price cut!!

mech_2

PrinceGaz wrote: »

Actually I think that is very encouraging. If next years oil-price averages only US$50 per barrel (only slightly higher than it is now), then that will mean energy prices will return to levels seen during 2005.

Not necessarily. We mustn't jump to conclusions. Your predictions assume 2005 was a typical year, but the winter peak in wholesale prices at the end of 2005 suggests the retail prices were set too low. It also assumes the dollar/pound exchange rate hasn't changed since 2005, which it has: 50$ a barrel now is 20% more expensive in pounds than it was in 2005.

According to historical data on price changes available on uSwitch
<... snip>
So that gives an average real increase in gas prices of about 85%, and of electricity by about 55%.

I concur.

That means that, if your prediction that oil prices will climb back up to an average of US$50 per barrel during 2009,

Not my prediction. A Merryl Lynch analyst's prediction. He made no mention of UK natural gas prices.

we should by your reckoning see price reductions for consumers of about 45% from current levels on gas (bringing it to 55% of current prices), and about 35% on electricity prices (bringing it to 65% of current levels). Thanks for that, it's great that you've given us such good news on forthcoming price-cuts, mech, as normally you predict doom and gloom.

Not my prediction. A Merryl Lynch analyst's prediction. He made no mention of UK gas prices.

Of course, if oil prices don't climb back up to US$50 per barrel next year, but instead fall further as the world recession deepens and manufacturing output is cut back further (which recent reports suggest it will), the price reductions for consumer energy supplies may well be significantly better.

It's the prices next winter which will be the overriding factor. If the guy from Merryl Lynch is correct and the oil price falls lower in the middle of 2009, and yet still manages to average $50 throughout the year, what does that say about next winter's oil price? It would have to be higher than $50 for him to be correct.

Given the above, a 20% cut in gas prices and 15% in electric with immediate effect should be easily affordable given how they look to future prices when deciding what rates should be now.

No. Past prices determine what the retail price is now. Looking at future trends is only useful when you have some idea what they will be. Next year's winter prices are anyone's guess at present. The market has been too volatile over the last 3 or 4 years to make looking that far ahead reliable. The winter price will probably be more obvious in the summer, but that's months away.

Further price cuts would follow in the spring to bring prices down in total from their current levels to the amounts they should then be (which would be a somewhat higher percentage cut than the one I suggest now).

I would suggest prices similar to what we had through 2007 would be most probable for 2009. The price rises we've seen this September will likely reverse in the spring. Prices may go down a little further beyond that next year, but I think it's too soon to say.

I think your prediction is very encouraging, mech. And I hope it is correct (or even falls short of just how low oil prices are next year)

Not my prediction. A Merryl Lynch analyst's prediction. He made no mention of UK gas prices.

logie28

in the summer when oil prices where high, the exchange rate was near as £1=$2 this wasnt taken into consideration then!

Always excuses. Why aren't the petrol stations saying,, $per barrel is very low but the exchange rate is prity cr*p so we cant pass on saving to you!!


http://news.yahoo.com/s/ap/oil_prices

seems the yanks dont mess about making excuses!!!!!!

1carminestocky

logie28 wrote: »

in the summer when oil prices where high, the exchange rate was near as £1=$2 this wasnt taken into consideration then!

Always excuses. Why aren't the petrol stations saying,, $per barrel is very low but the exchange rate is prity cr*p so we cant pass on saving to you!!


http://news.yahoo.com/s/ap/oil_prices

seems the yanks dont mess about making excuses!!!!!!

But of course the US has REAL competition whereas we have cartels in all but the legal definition of the word. I have to say I only managed to read about half of mech's post, it seemed mightily repetitive, almost like a company mantra of hackneyed and frankly long-discredited excuses...

logie28

[STRIKE][/STRIKE]

1carminestocky wrote: »

But of course the US has REAL competition whereas we have cartels in all but the legal definition of the word. I have to say I only managed to read about half of mech's post, it seemed mightily repetitive, almost like a company mantra of hackneyed and frankly long-discredited excuses...

[STRIKE][/STRIKE]


Half!!!

i got to the excuse about the exchange rate then gave up, obviously the " cartel" in the u.k exists, if it didn't there would be competition, if there is really competition with the big six, can some one please give me the figures that define this.

SwanJon

1carminestocky wrote: »

logie28 wrote: »

in the summer when oil prices where high, the exchange rate was near as £1=$2 this wasnt taken into consideration then!

Always excuses. Why aren't the petrol stations saying,, $per barrel is very low but the exchange rate is prity cr*p so we cant pass on saving to you!!


http://news.yahoo.com/s/ap/oil_prices

seems the yanks dont mess about making excuses!!!!!!

But of course the US has REAL competition whereas we have cartels in all but the legal definition of the word. I have to say I only managed to read about half of mech's post, it seemed mightily repetitive, almost like a company mantra of hackneyed and frankly long-discredited excuses...

The US doesn't have much competition for energy. For most states it is still a monopoly. A few (New England & Texas mainly) have opened markets.
California dabbled, but as they bought a lot of electricity from neighbouring states and the ex-monopoly had fixed prices it all went a bit Pete Tong.

Also, that link is talking about petrol, not natural gas, so it's not as relevant as it could be.

All in all, I'm looking forward to prices dropping - hopefully by 2010 they'll be back to 2005 prices and I won't notice the plan ending.

logie28

I know the price is linked to oil/petrol.. it follows the sentence in my post referring to oil/petrol,,

The reason it is used is simple, petrol IS directly linked to oil prices, that is the reason why petrol prices have fallen.

I am mealy jumping on the energy companies (old) bandwagon about the link between oil and gas prices.... the rise, sadly not the fall,

The citizens of the good old USA dont take lightly to being ripped off royally (unlike us) thay is why direct action is taken immediately when prices fall..

Please dont tell me that our Yankee cousins are being ripped off on the same level as us on gas prices?? because they are not, the whole argument of access , storage and buying does hold ,, but , they still would not stand for it. Even though the "original cartel " originated in the good old US OF A..

I'm almost certain fuel poverty per ca-pita is higher in good old blighty!!! in fact id bet my last dollar on it, we are being screwed!!!

jackieb

I've been told that a lot of the oil companies have priced contracts on the basis that the price of oil being about $80 a barrel. In Russia they are stopping land drilling next year because they were based on oil being $90 a barrel. In Saudi a lot of contracts are based on oil being $25 a barrel so they're still okay for now. I think that there's going to be big slowdown in the oil industry if the price of oil keeps falling. It's also going to affect drilling and exploration in the North Sea next year.

1carminestocky

OPEC have held the world to ransom for years. If they experience a bit of financial pain, then so be it. Welcome to the real world, my friends. Of course, I look forward to the day I can greet the UK energy companies with that phrase. No fear, the day is fast approaching...

Cardew

SwanJon wrote: »

The US doesn't have much competition for energy. For most states it is still a monopoly. A few (New England & Texas mainly) have opened markets.
.

I have some knowledge of US gas/elecric bills, and can confirm that most States have a monopoly.

I have been in the USA for the past few days and dealing with some large energy bills, both domestic and commercial.

The improvement over UK is that the fuel element cost - particularly for gas - can vary month by month, but there is an additional charge for the delivery/infrastructure.

Another good point is the the first xx kWh are cheaper and then the price increases.

To give an example for an Electric only property in Florida(not Orlando thank goodness!!) I pay a standing charge/taxes of approx $5 a month and 10.15 cents(7p) for the first 1000kWh and over 1000 kWh the price rises to 12.18 cents. (8.3p)

mech_2

logie28 wrote: »

I know the price is linked to oil/petrol.. it follows the sentence in my post referring to oil/petrol,,

The reason it is used is simple, petrol IS directly linked to oil prices, that is the reason why petrol prices have fallen.

I am mealy jumping on the energy companies (old) bandwagon about the link between oil and gas prices.... the rise, sadly not the fall,

The oil price had been rising consistently for nearly a year back when household energy prices went up in January or February, so on that basis it's a bit unrealistic to expect the retail prices to drop the moment the spot price drops.

The reason for this lag has been covered in this thread already, but you may have missed it if you can't be bothered to read past the first line of each post.