I know we are being conditioned to expect and accept this, but what is it really about? Is there a threshold that we reach where gas becomes more valuable than gold? Or is it just because the regulator has told the energy companies that it’s OK to rip us off some more? Energy companies have made billions in windfall profits and now are being allowed to make even more. The chief executive bonus soars skywards while the poorest in our community choose between freezing and starving.
That is what we have to expect whilst this band of charlatans are running the show. Hopefully Thursday was the start of the end.
Energy companies buy Gas in advance of hitting your house, so the wholesale gas price they were buying at in March is what you will see in October etc. Some months of the the year Energy companies lose money but make it back at other times of the year. This is because they try to give you a set unit price rather than it go up and down throughout the year almost daily like the stock market. This is why the regulator can already tell us that the market CAP will have to increase in Q4 this year. The market cap is the biggest issue we have at the moment because it’s basically stopped competitive pricing which in turn drives down profit margins. It’s doing the exact opposite of its intention. My qualifications? I was a senior manager at one of the big 6 for 15 years and then had the contract for the North West of the U.K. sales for Shell Energy.
Thats all well and good but when energy companies are making massive profits and dishing out huge bonuses to shareholders while customers are seeing massive rises in costs then there is something wrong with the whole system.
I’m sure you know what your talking about Terry. Where exactly do they buy that gas from? How does that impact on electricity costs? Standing charges? And varying tariffs that bear no reference to the market cost of the gas. I don’t think this is capitalism because it is an artificially created marked to sell a commodity. A commodity is a product that can’t be distinguished from its competitors other than by price. Marketers will tell you that the way you define your product is by offering superior service, but service adds cost and gives competition a chance to steal your customers. Energy, water and transport used to be called utilities, because they were things that people relied on to live. Shareholder value wasn’t part of the utility. Who owns our energy supply anyway? I know about pension funds, but haven’t they got a lot of investment from abroad. Hardly likely to invest to make a loss. You could say that Christmas tree companies make a loss for 10 month of the year, but boy do they make in up in November/December. Btw do they donate to the Tory party?
In that case why did the regulator raise the cap in April when it was for gas bought in November long before Putin got too big for his boots? Surely there was no need to do then
Because it’s only the Tories blaming energy price rises on Russia and Ukraine. That’s absolute bollax
We get the majority of our Gas from the North Sea and then from pipelines from Saudi, Qatar etc. only a very small amount enters the U.K. from Russian sources. Gas and Oil are global commodities so they are set by supply and demand. The wholesale gas price is a global price and Energy Suppliers buy it based on what they believe they will supply to their customers throughout the year. The wholesale price is a key measure to what we will pay in future. Gas prices are now significantly lower than the spike in March, so Q1/Q2 we should see massive reductions if OFGEM and the government manage the suppliers correctly.
Cheers. I have another dumb question. What cars to the spike wholesale prices? Anything specific or just a general need?
It’s basically supply and demand. As the world recovered from COVID, production and general life returned to normality. The U.K. government depleted all of its gas stock in Scotland and a cold winter in the northern hemisphere caused an increase in pricing. It’s not helping though that the huge industrial development in Asia is putting a massive strain on all fossil fuels.
Since leaving the EU, our beloved government has had the opportunity to charge energy at zero rate VAT. So far they are still charging 5% as it was before we left. As energy bills have doubled the amount of VAT the government receives has doubled. As VAT is a regressive tax (paid at the same rate regardless of income) zero rating VAT would benefit those on lower incomes most. However, this government chooses to give every household (regardless of income) £400. Those with two homes get double bubble. I know this will not make a huge difference to the overall situation but it would send a positive signal to those low incomes. I wonder why the Minister for Brexit Opportunities has not thought of this one. It is a lot better than putting crowns back on pint glasses. Am I the only one who thinks the most important thing about pint glasses is what is in them not what is on them?
