Gas price plummet - but not for you!!

taxdodger

https://www.theice.com/marketdata/reportcenter/reports.htm


Natural Gas Index Date Price February 27, 2009 33.520 February 26, 2009 47.692 February 25, 2009 48.291 February 24, 2009 49.046 February 23, 2009 49.886 February 20, 2009 50.877

1carminestocky

Apparently these prices need to be maintained for at least a few [STRIKE]months[/STRIKE] [STRIKE]years[/STRIKE] decades before they can be passed on. :rolleyes:

taxdodger

I think a gas company announced a 7% price cut today.
It's called taking the !!!!.
The company bosses should be jailed along with OFGEM.

ed123_2

...is'nt strange how they all move together with small retail price drops.0%-10%. following 50%+ drops in the wholesale price..one may come to the conclusion they are operating a cartel...surely not....that would be illegal.....

mech_2

The average price of month-ahead gas during February has been 27% lower than the average over the previous six months (which would take us back to roughly when the retail prices were put up). If commodity costs make up half of the retail cost, that would mean we should be billed 13.5% less for gas in March. Or at least it would if all the gas we use was traded month-ahead and we used the same amount of gas every month and prices were changed monthly to reflect the costs of the month before.

The problem is that it's not that simple. Most of the gas we use isn't traded one month ahead. Retail prices are chosen to cover future months' prices which are uncertain. Guesswork on our part is ultimately futile.

taxdodger

mech wrote: »

The average price of month-ahead gas during February has been 27% lower than the average over the previous six months (which would take us back to roughly when the retail prices were put up). If commodity costs make up half of the retail cost, that would mean we should be billed 13.5% less for gas in March. Or at least it would if all the gas we use was traded month-ahead and we used the same amount of gas every month and prices were changed monthly to reflect the costs of the month before.

The problem is that it's not that simple. Most of the gas we use isn't traded one month ahead. Retail prices are chosen to cover future months' prices which are uncertain. Guesswork on our part is ultimately futile.

Why mean of course we always pay the highest possible price for gas as the companies always buy such as to charge us the maximuum price, even if that means buying all the gas on the day it peaked.
OFGEM then put the big rubber stamp of acceptance on it and head off to the races with the gas company bosses.

1carminestocky

British Gas, for instance, will be coining it in at the moment on account of them having 2 separate businesses in the supply of residential gas - what they like to refer to as their 'downstream' business (i.e. supplying gas to residential customers) and their less-publicised 'upstream' business which involves extracting the gas from the North Sea and selling it on wholesale. It's an amazing state of affairs, really. It basically means British Gas (or Centrica, their parent company) can't really lose. If wholesale prices are high then the upstream business rakes in the wonga hand over fist, and if the wholesale price is low then the residential division coins it in. But their profits aren't added together for accounting purposes (and, probably more importantly, for press reporting purposes).

1carminestocky

mech wrote: »

The average price of month-ahead gas during February has been 27% lower than the average over the previous six months (which would take us back to roughly when the retail prices were put up). If commodity costs make up half of the retail cost, that would mean we should be billed 13.5% less for gas in March. Or at least it would if all the gas we use was traded month-ahead and we used the same amount of gas every month and prices were changed monthly to reflect the costs of the month before.

The problem is that it's not that simple. Most of the gas we use isn't traded one month ahead. Retail prices are chosen to cover future months' prices which are uncertain. Guesswork on our part is ultimately futile.

There's a very simple solution to stop all this so-called guesswork and allegations of profiteering. Force the energy suppliers to publish the wholesale prices they have purchased at and we can then all judge without any guesswork needed.

storminbalder

I don't believe for a moment that all the energy redistributors were stupid enough to buy all their supplies for months/years ahead at the peak of the market.

And if they were stupid enough to do so, why is it that we should suffer.

Thatcher is to blame and has a lot to answer for.

Cardew

ed123 wrote: »

...is'nt strange how they all move together with small retail price drops.0%-10%. following 50%+ drops in the wholesale price..one may come to the conclusion they are operating a cartel...surely not....that would be illegal.....

I suppose it is strange also when petrol prices all over the world rise(and fall) at roughly the same time. Nothing to do with oil prices of course.

Bread prices have risen quite dramatically all over the world at roughly the same time - nothing to do with grain prices of course.

Products made from Lead, copper and zinc have risen a great deal - nothing to do with the shortage of these metals and the higher price they command of course.

Ofgem have recently carried out a thorough investigation and came to the conclusion there is no cartel(howls of derision will now follow about the toothless ofgem no doubt)

The Parliamentary Committee on Energy carried out a thorough investigation and concluded there is no cartel(and they ain't toothless!)

Scores of people at the heads of all the Energy companies are involved in setting price levels we pay. It is inconceivable that they would all risk jail for 'fixing' prices between themselves and someone wouldn't 'blow the whistle' - even just to protect themselves.

Could it not possibly be that market prices determine what we pay?

SwanJon

storminbalder wrote: »

I don't believe for a moment that all the energy redistributors were stupid enough to buy all their supplies for months/years ahead at the peak of the market.

Hindsight's great isn't it.
Based on the same reasoning, why would anyone buy a house/shares/anything at the peak of the market?

If the best information they had was that prices were going to continue to increase, then buying in advance looked like the better deal.
They got it wrong, and we all have to pay.