Monday, January 02, 2006

Gas Prices to Increase

The volatile spot price for wholesale gas recently has been cited as a reason for increasing gas prices to domestic consumers.

In practise where you have a mismatch between supply and demand prices rocket. The best solution to this is to reduce demand otherwise there are major impacts on people on low fixed incomes.

What I find odd is that it appears that the major shippers have not tried to hedge most of their winter gas. It is possible for next winter that a sensible approach would mean that prices would be far more reasonable.

The purchasing price for gas moved dramatically last week.
DatePurchase Price p per kilowatt hour
Monday 26th Dec1.2328
Tuesday 27th Dec2.4704
Wednesday 28th Dec2.5103
Thursday 29th Dec5.1223

Anyone short of gas for Thursday would have had all sorts of problems. This issue and the decision not to go for energy security because of the cost has actually resulted in increased costs for consumers. At the same time Gordon Brown has increased the tax take - again this impacts consumers. It is also likely to result in decisions not to invest in projects again impacting consumers.

Shell Cuts Exploration Investment in North Sea 17th Dec 2005


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