BG Gas & Electricityl Increases

FB. said:

Yes, supply and demand play a factor, but if supply gets too tight, prices rise, which then attracts new entrants and new investment to provide what's in short supply. Back to the old chestnut of not a big enough profit margin for companies to want to take the political risk. Only the other day, Miliband at some Labour Party party hinted at how - if he was elected - he'd give the utilities a whipping. So which utilities in their right mind would want to invest with such threats?

Have a read of this interesting article on Europe's utility companies and the cost to consumers:
The cheapest energy in Europe

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it is supply and demand,keep the supply low the demand increases,therefore the price rises and the profits increase,next will be seeing the banks buying up oil and parking in it tankers offshore waiting for the price increase and as if by magic these ships head to port in the winter

alarm man said:

it is supply and demand,keep the supply low the demand increases,therefore the price rises and the profits increase,next will be seeing the banks buying up oil and parking in it tankers offshore waiting for the price increase and as if by magic these ships head to port in the winter

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they're way ahead of you. 2/3 of trades in oil are now by speculators vs 1/3 by actual end users of that oil vs about a 10:1 ratio the other way in he 90s



IIRC around 80-90% of the 2008 oil price spike was ultimately attributable to speculators like Kock industries - also the financial backers of the US Tea Party right wingers.

This is also demonstrated by the big spike in the hire price for the bulk carriers they used to store the oil offshore while building up the speculative bubble in 2008.



and yes, it would appear that I've spent far more time looking into this stuff over the years than's probably normal.

Gavin A said:

they're way ahead of you. 2/3 of trades in oil are now by speculators vs 1/3 by actual end users of that oil vs about a 10:1 ratio the other way in he 90s

View attachment 15154

IIRC around 80-90% of the 2008 oil price spike was ultimately attributable to speculators like Kock industries - also the financial backers of the US Tea Party right wingers.

This is also demonstrated by the big spike in the hire price for the bulk carriers they used to store the oil offshore while building up the speculative bubble in 2008.

View attachment 15155

and yes, it would appear that I've spent far more time looking into this stuff over the years than's probably normal.

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Pretty sure I saw on Twitter the other day that TOTAL has whistleblowed on Oil price rigging, was meant to be the next big libor scandal- brushed under the carpet it seems

Gavin A said:

they're way ahead of you. 2/3 of trades in oil are now by speculators vs 1/3 by actual end users of that oil vs about a 10:1 ratio the other way in he 90s

View attachment 15154

IIRC around 80-90% of the 2008 oil price spike was ultimately attributable to speculators like Kock industries - also the financial backers of the US Tea Party right wingers.

This is also demonstrated by the big spike in the hire price for the bulk carriers they used to store the oil offshore while building up the speculative bubble in 2008.

View attachment 15155

and yes, it would appear that I've spent far more time looking into this stuff over the years than's probably normal.

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But the 'speculators' pile into commodities to hedge against inflation as governments and central banks erode the vaue of paper money. you can't print oil or gold, it has real value.

Dont always believe what the media force feeds you.....

Q/ Why do people always fall for the same regurgitated benign arguments when talking about Energy price rises and the reasons behind it?

A/ The energy markets are fixed, plain and simple - theoretical economic arguments have little to do with it.

It is a familiar pattern now isnt it?

The impression is given that energy companies have been stoically resisting price rises -

like a stubborn heroine resistively crossing her legs, "Doing her solemn duty for Britain",

preventing themselves from answering the call of nature for "The good of the nation".

Wholesale gas prices drop in summer, price reductions dont get passed on.

No one asks questions, profit margins rise.

Early Autumn arrives, media organisations spring in to life.

News bulletins are released informing the public of imminent price rises, with a plethora

of spurious consequential reasons justifying the move, prior to peak season / demand.

Energy companies take turns to be the first to issue bad news - akin to a fixed pass the

parcel - the parcel engineered to drop on each individuals laps in a non identifiable order.

One energy company announces the price hike, the rest follow in succession.

Politicians shuffle their feet. Economic indicators fall.

People are placated by farcical stories telling them that they have the cheapest energy in

Europe.

Everyone knows that prices have passed beyond the realm of affordability- daily life goes on.

Energy company Chief Executives rub their hands in expectation of the anticipated bounty.

Politicians argue about the minor semantics of governance, whilst people struggle.

Who cares about liberalism v conservatism- social instability is imminent unless things change.

Pumping up the wheels of the deflated economic cart with persistant quantitative easing,

wont prevent the cobbled road from feeling bumpy.

We need stable energy prices & supply, to be able to plan for the future - without it our

economy will never regain its competitiveness.

UK Nucleur power stations are getting older, coal powered electric stations are being

closed, gas generating electric power plants are being built for short term profit.

Energy companies profit, customers suffer, Energy companies profits rise, customers

suffer some more, politicians dither.

We need to diversify the ways which we obtain energy, to make it harder for national

governments and individuals to control our future energy markets.

We need to use natural resources around us more effectively.

We need to decentralise power generation.

We need to invest in technology that better utilisies power we consume.

We need to start thinking about our own personal energy security and making the right

decisions to benefit our own energy future.

Speculators can also serve a useful purpose.

If an oil company wants to begin a new project, they need some degree of confidence that it will be profitable. In our very volatile economic situation, oil companies will sell contracts for oil into the market, at a set price, for delivery at a set date in the future. This guarantees the oil company a minimum price for the oil and therefore guarantees that the billions of pounds/dollars spent on exploration and production doesn't end up loss-making.

So, for exmaple: I have found an oil deposit. I reckon that I can extract a million barrels a year, for $80/barrel - and the oil price currently sits at $90.
I therefore sell to speculators my oil production for the next five years (five million barrels), at a fixed price of $89/barrel. The speculators get it slightly cheap and I guarantee to make a 10% profit on my oil productoin without having to worry about what happens to the oil price.
Often known as "hedging".
Airlines may well hedge the oil price as a protection against fuel price rises.
It's not dramatically different from a borrower taking out a fixed-rate mortgage or a fixed-rate gas/electric plan.
However, over the very long term, although hedging gives protecion from extremes in prices, it generally works out slightly more expensive than to ride the rollercoaster of market price fluctuations - if you can tolerate the variation in your budgeting.

Hi Vegelen

If the utility companies are so profitable, why don't you buy yourself some shares?
Surely if it's as profitable as you imagine, it'd even be worth borrowing lots of money to buy them.

Many retired people who manage their own pension pot will stuff it full of shares which sell items essential to their daily life and happiness - such companies might include: Tesco, GlaxoSmithKline, Imperial Tobacco, Unilever (Persil/Lynx etc), Diageo (Guinness/alcohol), Centrica (British Gas), United Utilities Water, British Telecom and many others.

Sadly, life for shareholders isn't all gravy either; OFWAT price controls forced United Utilities to cut their dividend payout to shareholders by 9% in 2010. Anyone relying on UU for pension income would have seen a 9% drop in that income and is still somewhat below its peak of a few years ago.

Re: BG Gas & Electricity Increases

FB. said:

Hi Vegelen

If the utility companies are so profitable, why don't you buy yourself some shares?
Surely if it's as profitable as you imagine, it'd even be worth borrowing lots of money to buy them.

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In February 2012, Centrica reported pre-tax profits of £2.4bn from revenues of £22.8bn for 2011.

The price to earnings ratio of many UK energy company shares like Centrica has risen too high.

Lots of shares are in circulation at too high a price based on present future earnings.

This future profitability is divided amongst an ever growing list of benefactors.

The main way these energy companies can keep meeting their obligations is to keep

raising their prices.

Centrica have invested lots of money in building electricity generating gas power stations

to enhance their short term profitability.

Gas is bought cheaply and electricity is generated at significant profit.

Shareholders who currently buy shares with extremely high P/E ratios are buying

overpriced commodities.

A companies profitability doesn't always translate into decent returns for its shareholders.

Shareholders need to buy shares with good fundamentals.

Companies can and do squander the money they generate.

Many of these companies are paying ridiculous salaries to their senior executives via

renumeration commities, with ever more complex bonus structures.

Sam Laidlaw made 4.3 million last year 1.3 million salary, 3 million in share sales - those

figures dont include additional future bonuses.

Many people that read these forums will baulk at the idea that these

companies aren't generating money, given their present energy bills and the current

economic climate.

The price increases are to boost the green deal scheme more customers will be looking to do something to cut down costs and British gas have the answer by getting customers to join the green deal

British Gas Boss: We Will Go Bust If We Dont Raise Prices This Winter.

http://www.standard.co.uk/news/uk/b...f-we-dont-raise-prices-in-winter-8208910.html

- So it seems the left hand, "British Gas", will go under if prices arent raised this winter, while the right hand "Centrica"prospers.

"No one should be in a place where they can’t eat because of their energy bills.”

- But they are Mr Bentley, welcome to reality.

As predictable as sheep, NPower now announce 8.8% Gas and Elec 9.1% rises.

Yep and BG claim that 42% of their increase is due to Renewables!!!

Guess we'll be seeing stones thrown at owners of solar panels next!

if it wasn't for my gas hob i wouldn't need gas anymore, three cheers for ASHP,Solar thermal, PV and immersun

@jason121 seems to me like you need one of those 80's slow cookers (you can still get them). It's a resistive load, so put it on the immersun relay, and then just heat it up if there wasn't enough excess at the end of the day. or ... check this out : 11 July 07 Navitron's C-zero Solar Kettle/cooker - pioneered by the Navitron forum community!! :rockon2:

Next thing we know Jason will have his hair in a pony tail and wearing sandells :29: