Friday, February 17, 2006

Massive Gas Price increases

Unsurprisingly the price increases in the wholesale market are now feeding through into the retail market.

We are now encountering the next phase in pricing of fossil fuels. As they become scarcer then the prices increase. What is needed is serious effort to bring demand properly under control so that there is a balance between supply and demand.

In the case of the UK market for gas, however, there are particular problems that drive gas prices up beyond that on continental Europe.

I am expecting fuel and the pricing of fuel to become one of the key political issues starting this year. The government have been lucky to avoid a real emergency in gas supply. Although it is still in theory possible for the weather to turn really cold and an emergency occur I would be quite surprised given the weather so far if this happened this winter.

Next winter, however, is a different issue. There will not be any substantially greater supply and the North Sea supply will go down.


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