I LOOKED out at the frost on my lawn yesterday and thought about the joys of autumn. The golden leaves falling from the trees, the mist on your breath on long walks, log fires in a local pub and, most predictable of all, the seasonal skewering of us consumers by the energy suppliers.
Yes, last week British Gas and peers hiked their winter prices, in part blaming the government energy policy and apparently assuming the public will accept that if it is getting colder then we must need a price rise.
Why are seasonal price hikes seen as logical? Winter comes every year, 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?
Blame the bigger picture energy picture, they say. What, the one where Russia is pumping more oil than ever, where US natural gas prices are near rock bottom on the back of a glut of supply and China is falling over itself trying to pretend it’s still growing at near eight per cent per annum when in reality it has virtually stopped buying some commodities because it’s stock-piled so many?
There are more legitimate reasons for firm prices, according to the latest research from Credit Suisse (CS). CS cites tight liquefied natural gas (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 in its case for its price rises.
Still, gas prices aren’t really my problem these days: I live so far out of London that we have the joys of heating oil. Now that really is cheap. Not.
Steve Sedgwick is an anchor for CNBC.