Friday, December 16, 2005

Last Gasp

Centrica has warned that it will have to raise gas prices again.
The owner of British Gas has warned that energy bills will rise again in 2006 to pay for soaring gas prices.
Centrica said volatile wholesale gas prices meant trading conditions would remain "challenging", warning of more job cuts in order to save costs.

British and Scottish Gas put up bills 15% in September, but their residential businesses have since made a loss.

The firm warned that further increases were likely, as the wholesale price of gas had risen by 40% since then.

Free markets are a way of managing scarce resources; given that the wholesale price of gas is rising, that would tend to suggest that gas is becoming a little scarce, or rather that cheap supplies are drying up.

This is part of the whole energy crisis, about to hit this country, that the government has been ignoring, bar occasionally getting a junior minister to pop up and maintain that "the lights wn't go out". But, no matter how much the Chancellor turns a blind eye (pun intended) to this crisis, the sustained and continuing rise in wholesale prices suggests that the problem is not going to go away any time soon. In the meantime, domestic heating costs, both gas and electircity, will rise and North Sea gas company profits are down as it becomes harder and harder to extract the gas. Given this crisis, what does El Gordo do?

He raises the tax on North Sea oil company profits from 40% to 50%. Nice one, Gordon, you useless bastard.

If I were an ex-coalminer, I'd be polishing up my pick and shovel right about now...

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