GO
Loading...

Fall: The Season of Illegitimate Energy Price Rises

Gary Wade | Stone | Getty Images

So as I looked out at the frost on my lawn yesterday morning, I thought whimsically about the joys of autumn.

Amongst other things, the golden leaves falling from the trees, the mist on your breath on long walks on the Weald, log fires in my local pub and, most predictable of all, the seasonal ripping off of us consumers by those lovely energy suppliers.

Ah what bliss! Yes, last week British Gas and peers hiked the winter prices, in part blaming the Government energy policy for the ramp-up and confirming their disdain for the British public by assuming that we are so thick to think that if it is getting colder then it must be ok to slip in a price rise.

Logical eh?

Well why is it logical? Shock horror, winter comes every year, it gets colder in the Northern hemisphere every winter so why aren't forward supplies managed better to even out the effects of the temperature change? Why are the two lines on the graph showing wholesale versus retail prices so utterly divorced these days?

Oh it's the bigger energy picture they tell us? Oh yeah, the bigger picture, the one where Russia is pumping more oil than it has ever done, the one where U.S. natural gas prices are near rock bottom on the back of a glut of supply and the bigger picture that has China falling over itself trying to pretend it's still growing at near 8 percent per annum when in reality it has virtually stopped buying some commodities because it has stockpiled so many.

Good old Europe's got the answer.

Let's get rid of nuclear, let's subsidize solar and wind, let's vilify our biggest supplier Gazprom for anti-competitive practices (you can just hear the Russians quaking in their boots) and expect the consumer to pay the price every time.

To remind you, the Russians provide 25 percent of Europe's imported gas and are not averse to turning the taps down a little every time one of their former-Soviet block buddies has a problem with Putin et al.

This at a time when the U.K. is vilifying electricity companies every time they use coal or other hydrocarbons.

Of course there are other legitimate reasons for firm prices, according to Credit Suisse's latest research.

CS cites tight LNG supply in a post-Fukushima world as a firming factor and yet the same report notes that recent Gazprom negotiations with the EU "resulted in price reductions for pipeline imports into continental Europe, leaving increased volumes of Norwegian gas to be sent to GB."

I didn't see British Gas mentioning that nugget in their excuses for their price rises.

Anyway, it's not really my problem what you Londoners pay for your gas these days.

I live so far out in the sticks that we don't use gas. We have the joys of heating oil. Now that really is cheap.

Doh!

Contact Opinion

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More