MSE News: Government minister: 'Gas price hikes show market's working'

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"Minister Greg Barker said that while price rises were "uncomfortable", volatile prices were a key part of the market..."

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Government minister: 'Gas price hikes show market's working'



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MillicentBystander

The market is certainly working for the Govt. as they continue to cream off the 5% from the ever increasing financial burden imposed on the UK populace and spend far too much of this on funding the toothless industry 'regulator' that's for sure.

jobdone1

I can't believe i am reading this, Some minster elected by us say's its working well then we have very little hope of democracy then.

andymd

I think his point is there was a shortage of gas, the price went up attracted other sources of gas and enough gas was supplied and the price fell again. This does mean the market is working.

In Summer months (if they ever arrive) the price falls and encourages people to buy and put into storage in time for the next winter. All signs of a functioning market.

And despite scare stories from uSwitch and others, the lights didnt go out and energy companies didnt increase prices just because it was cold (yet)

It's popular to bash the government/energy companies whatever thye say/do but we still have some of the cheapest gas prices in Europe. The trouble is we still use far too much of it and people have to take some responsibility for reducing their consumption.

The government/energy companies were providing insulation last year and so many people ignored this free help, yet still complain they can't afford to heat their homes. If it is really that bad, surely they would take any help going.

MillicentBystander

There IS no storage, though. An indication of an industry that is much more interested in paying a good dividend to its shareholders than safeguarding its customers' interests by investing in the infra structure that would absolutely negate such a shortage increasing the prices in the first place! Oh, the spot price has increased and we have no reserves?? What to do? I know, we will increase the retail price. The Govt won't mind because their 5% is worth more and, let's be entirely honest, they are always desperate for some more cash. Easy peasy. If we are really lucky we will get some crazy Govt Minister saying the market is working perfectly...


PS And not the old 'some of the cheapest prices in Europe' nonsense. Makes my blood boil this one. Different currencies means that any comparison is absolutely and utterly worthless.

Edit: the most damning indictment of your post? Thanked by a British Gas employee. Says it all, really...

andymd

There might not be enough, but there is storage. The problem this Winter is that it has been exceptionally cold for a lot longer than normal. Usually we would start re-filling storage in March in preparation for next Winter.

The industry could invest in more storage which will not be required most years just in case we have the odd cold year. Or, when it is cold the market price goes up temporarily to ensure we have enough gas. It is not clear which option presents the best value to consumers in the long term.

It's a bit like the snow problem. We always complain how badly we are affected by snow in this country when everywhere else seems to function just fine in far worse conditions.

This is probably because these other countries are affected by snow a lot more and the case for serious investment in protection from snow disruption is much greater. We just dont get that much snow (although maybe the frequency is increasing if this year is anything to go by) We could spend billions preparing, which pays off once in a blue moon, or we could just accept it when it causes disruption.

MillicentBystander

andymd wrote: »

There might not be enough, but there is storage. The problem this Winter is that it has been exceptionally cold for a lot longer than normal. Usually we would start re-filling storage in March in preparation for next Winter.

The industry could invest in more storage which will not be required most years just in case we have the odd cold year. Or, when it is cold the market price goes up temporarily to ensure we have enough gas. It is not clear which option presents the best value to consumers in the long term.

It's a bit like the snow problem. We always complain how badly we are affected by snow in this country when everywhere else seems to function just fine in far worse conditions.

This is probably because these other countries are affected by snow a lot more and the case for serious investment in protection from snow disruption is much greater. We just dont get that much snow (although maybe the frequency is increasing if this year is anything to go by) We could spend billions preparing, which pays off once in a blue moon, or we could just accept it when it causes disruption.

Blimey. Shakes head. And who do you work for, I wonder? The whole point is that if you have *decent* storage you can buy much greater amounts of the stuff when the spot price is cheap and your customers are not affected by such ridiculous swings in the price. This is not exactly rocket science, you know. But the energy suppliers as the market stands at the moment have absolutely no need to spend some of the profits on storage facilities because they are allowed to simply up the price to their customers as soon as the spot price increases. Like I have said before, it's an incredibly simple business - look at the cost of supply and set the prices so there' £50 per household profit from a captive market. Easy peasy.

andymd

MillicentBystander wrote: »

Oh, the spot price has increased and we have no reserves?? What to do? I know, we will increase the retail price.

I haven't heard any supplier announce a price increase because the spot price went up last week. I'm sure suppliers dont make their pricing decisions based on spot prices, they hedge to ensure the market volatility isn't not experienced by their customers.

MillicentBystander wrote: »

PS And not the old 'some of the cheapest prices in Europe' nonsense. Makes my blood boil this one. Different currencies means that any comparison is absolutely and utterly worthless.

That's what exchange rates are for. Even if the rate provides some distortion, converted into Euros, UK gas prices are nearly 50% cheaper than the EU-15 average, 20% cheaper than the second cheapest (Ireland) and less than a third of the price in Sweden. Does it make your blood boil because it's an inconvenient truth that brings much of the criticism of our energy market in context?

andymd

MillicentBystander wrote: »

Blimey. Shakes head. And who do you work for, I wonder?

So anyone who doesn't share your cynical view of the world must work for an energy company?

If storage is as much of a no-brainer as you suggest (I'm not actually saying it isn't) then why hasnt anyone built it. Maybe not the energy companies for the reasons you suggest but surely someone else would see the value and build storage and make money out of it.

MillicentBystander

andymd wrote: »

I haven't heard any supplier announce a price increase because the spot price went up last week. I'm sure suppliers dont make their pricing decisions based on spot prices, they hedge to ensure the market volatility isn't not experienced by their customers.



That's what exchange rates are for. Even if the rate provides some distortion, converted into Euros, UK gas prices are nearly 50% cheaper than the EU-15 average, 20% cheaper than the second cheapest (Ireland) and less than a third of the price in Sweden. Does it make your blood boil because it's an inconvenient truth that brings much of the criticism of our energy market in context?

It makes my blood boil because it's generally spouted by industry shills who have experienced their first Big 6 induction meeting and is entirely meaningless nonsense. Say the Euro lost/gained 20% compared to the pound today, what would that do to your comparison? Would gas in Continental europe be 20% more/less than it was yesterday?

andymd

MillicentBystander wrote: »

It makes my blood boil because it's generally spouted by industry shills who have experienced their first Big 6 induction meeting and is entirely meaningless nonsense. Say the Euro lost/gained 20% compared to the pound today, what would that do to your comparison? Would gas in Continental europe be 20% more/less than it was yesterday?

The exchange rate does make it a slightly difficult comparison but does not make it nonsense. Even if the pound fell by 20%, taking it to parity with the Euro (pretty much the lowest it has ever been) the UK would still have the cheapest gas in Europe and still considerably below the average.