saunaman Posted November 12, 2012 Share Posted November 12, 2012 I can believe that there is deliberate manipulation of the wholesale energy market , and will be following up TeaFan's links with some interest . One recent article that caught my eye was in yesterday's Mail ( sorry , the Express had sold out ). "Big UK firms may move to America for cheap energy". Apparently Jeremy Nicholson , director of the powerful lobby group that campaigns for companies in the steel , chemical and glass industries , said that British companies could not compete against US groups because their energy costs were 4 times cheaper (shale gas ). He said that Britain needed to develop its own shale gas industry - I'm not convinced , having watched reports on the problems of fracking - but I could be wrong - thoughts ? Link to comment Share on other sites More sharing options...
JFKvsNixon Posted November 12, 2012 Share Posted November 12, 2012 Is it possible to have a competitive market when all the energy companies buy the same product off the same markets? Link to comment Share on other sites More sharing options...
andygardener Posted November 12, 2012 Author Share Posted November 12, 2012 I don't know if you have seen this Andy? A whistle-blower has tipped off the FSA and Ofgem about alleged manipulation of wholesale gas prices by large energy companies http://www.guardian.co.uk/business/2012/nov/12/libor-like-manipulation-gas-markets This will be very interesting to watch. If proven, it will be fraud on a massive scale and would make a huge case for nationalisation of energy supply. The article is worth reading in its entirety - worth noting, for example, that the energy companies have been resisting moves for greater regulation that would make it more difficult to manipulate gas prices. Tax evasion and avoidance, money laundering, rate fixing. Who really trusts large corporations any more? I hadn't seen that so thanks very much for that. Makes sense though. When a company has two sections, one of which generates energy and the other of which buys energy and sells it on it seems to provide a very strong incentive for the company to inflate the cost of what it sells to itself. Link to comment Share on other sites More sharing options...
TeaFan Posted November 12, 2012 Share Posted November 12, 2012 I hadn't seen that so thanks very much for that. Makes sense though. When a company has two sections, one of which generates energy and the other of which buys energy and sells it on it seems to provide a very strong incentive for the company to inflate the cost of what it sells to itself. It's not clear whether any such price fixing has resulted in much higher domestic gas prices but whether it has or not, wholesale gas price is the reason quoted by the gas companies for jacking the domestic prices up, so if it turns out they have been making it go up then people are going to be very unhappy indeed. Link to comment Share on other sites More sharing options...
Anna B Posted November 12, 2012 Share Posted November 12, 2012 It's not clear whether any such price fixing has resulted in much higher domestic gas prices but whether it has or not, wholesale gas price is the reason quoted by the gas companies for jacking the domestic prices up, so if it turns out they have been making it go up then people are going to be very unhappy indeed. This doesn't surprise me at all. When profits are rising, and the price is rising, somebody is getting rich. The current inflation in food prices is also largely the result of speculators pouring into the commodities markets after the property bubble burst. Those poor bankers have got to make their millions somehow... Link to comment Share on other sites More sharing options...
Guest sibon Posted November 12, 2012 Share Posted November 12, 2012 This doesn't surprise me at all. When profits are rising, and the price is rising, somebody is getting rich. The current inflation in food prices is also largely the result of speculators pouring into the commodities markets after the property bubble burst. Those poor bankers have got to make their millions somehow... That will get worse this winter. There are genuine shortages in many staples after the poor summer. That, on its own would cause price rises and misery for many. You can bet your second to bottom dollar that the speculators have already been at work, making a bad situation worse. Link to comment Share on other sites More sharing options...
andygardener Posted November 13, 2012 Author Share Posted November 13, 2012 I don't think that a state monopoly would be very good. They don't have a good history of providing innovation or efficiency. It might also destabilise our energy supply. If we only had one company, what would happen if they made a huge mistake, or if the workforce went on strike. In general, diversification is a good thing. I would like to see the energy companies being forced to be more transparent. Gas is gas. I really don't understand how there can be so many different prices for the same commodity. The Government should instruct the companies to charge a single price for domestic gas and a single price for domestic electricity. That way, we'd all be able to see who is the cheapest supplier. I'm surprised at you sibon. The monopoly would only be on billing and ensuring the price was as low as possible. Those who actually generate the energy are those who need to innovate and invest and they would continue to do so. Under the "competitive" system there can never be a single price for gas and electricity. The system is entirely dependant on the smoke and mirrors to keep telling a particular consumer in a particular area they will save money by moving to a new supplier. At any given point in time the vast majority of consumers are not on the cheapest tarrif they could be so for all of the big six there is always somewhere a sales opportunity. "We can save you money!" Mega, i'll switch and save cash based on the fact the person selling me this knows i'm in the old EB region where they are cheapest. Then a month afterwards the price changes (mainly upwards but very occaisionaly downwards) get announced. Bills gone up by 7% or 9%. Bad news but at least I switched to the cheapest available supplier so I'm still saving in real terms. Wrong! The average bill goes up by the headline rate. The actual bills go up according to the old EB region and guess what, as if by magic the supplier with the cheapest rates on the old tarrifs becomes one of the most expensive on the new rates and cease sales activity in that area. In a corresponding region the opposite happens and they get stuck into telling their new suckers how they are now the cheapest..till the next price change. The current system is nothing more than endless expensive customer churn with ever higher actual prices added to by the massive cost of all the sales and marketing. Link to comment Share on other sites More sharing options...
Guest sibon Posted November 13, 2012 Share Posted November 13, 2012 I'm surprised at you sibon. . Maybe we've had an ideological transplant each:D I really don't like the idea of monopolies. I don't think that state run companies are all that desirable either. I do think that the energy companies need investigating for price fixing. They also need regulating and someone should force them to make their pricing more transparent. Then, the Government could do the same to the water companies and the Telecoms. Link to comment Share on other sites More sharing options...
tinfoilhat Posted November 13, 2012 Share Posted November 13, 2012 Maybe we've had an ideological transplant each:D I really don't like the idea of monopolies. I don't think that state run companies are all that desirable either. I do think that the energy companies need investigating for price fixing. They also need regulating and someone should force them to make their pricing more transparent. Then, the Government could do the same to the water companies and the Telecoms. With telecoms though prices, realitivly speaking are on the way down - its being driven by technology. Gas and electric are (or are generated by) scarce resources. The price will only ever go up no matter who owns it. I don't doubt price fixing has occurred but I think it's only a small reason why the price has gone through the roof. Link to comment Share on other sites More sharing options...
andygardener Posted November 13, 2012 Author Share Posted November 13, 2012 Maybe we've had an ideological transplant each:D I really don't like the idea of monopolies. I don't think that state run companies are all that desirable either. I do think that the energy companies need investigating for price fixing. They also need regulating and someone should force them to make their pricing more transparent. Then, the Government could do the same to the water companies and the Telecoms. lol..fear not I'm as freemarket capitalist as ever as long as the market isn't rigged. Which this one is. If it wasn't rigged then the "competitors" wouldn't touch it with a bargepole. Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.