''As for the price increases, yes of course they rise pretty much together''
Agreed, but we;ve heard what is NOT causing the sharp increases in energy prices. Its not green taxes - stripping them all out doesn;t take that much off bills. And its not greedy energy companies, their margins are not spectacular.
So what is it??
Surely it must be supply and demand. Reducing supply (ie turning away from coal) whilst demand remains constant = higher prices. That's economics 101 isn;t it?
Investment down, profits up, 6 majors all putting prices up at the same time
I'm sorry, that just won't do.
Take Centrica [British Gas], figures for each of the past four years (2009, 2010, 2011, 2012) - this of course includes the non-UK business:
Turnover: £21.9bn, £22.4bn, £22.8bn, £23.9bn Profit before tax: £1.0bn, £2.8bn, £1.3bn, £2.4bn Tax (mainly UK corporation tax): £0.3bn, £0.9bn, £0.8bn, £1.2bn Profit after tax: £0.8bn, £1.9bn, £0.4bn, £1.2bn
Capital expenditure (excluding acquisitions): £0.6bn, £0.5bn, £0.8bn, £1.8bn
I don't recall Ed Miliband, or anyone else, saying shareholders should be compensated for the reduction in profits in 2011, nor is the increase in 2012 anything out of the ordinary. There's no windfall, and the profits are not excessive at all compared with sales or capital employed. What's more, they've been trying to invest more in the UK - in shale gas, for example. They also wanted to invest in gas storage but couldn't justify the investment partly because of regulatory uncertainty.
It's a good, solid, unexciting utility business, making regular but not excessive profits in a highly regulated market and operating internationally, paying a dividend which is well in line with international peers, employing a lot of people in the UK, and paying a lot of tax in the UK.
As for the price increases, yes of course they rise pretty much together - they're all subject to much the same wholesale prices and taxes, and in a competitive market prices tend to converge for commodity products.
The government gets lots in tax from the utility companies:
* VAT (reduced rate)
* Corporation tax on profits
* PAYE Income tax for employees
* Employees National Insurance
* Employers National Insurance
* Tax on shareholder dividends (for higher-rate tax payers)
'Surely it must be supply and demand. Reducing supply (ie turning away from coal) whilst demand remains constant = higher prices. That's economics 101 isn;t it?'
Or is demand rising? An increasing population must be using more power.
Electricity demand is generally flat-to-down. This is partly because high prices discourage marginal users, but is more because appliances and lighting are becoming increasingly efficient. There's another leg to this story as we switch out old, ineffecient air conditioning systems and replace them with new ones.
The major reason that energy prices are rising is that the marginal cost of production is set by natural gas. (Economics 101: the marginal supplier, i.e. an efficient CCGT, sets the wholesale price.) In the UK, we have domestic natural gas production declining as North Sea fields become depleted, and we also see declining volumes from Norway where we had negotiated long-term fixed price contracts. Essentially, the amount of $8/mmcf gas we consume is falling, and is being replaced by LNG imports, which are typically around $15/mmcf.
What a plum. Wild, crazy eyed, gibbering and vain. Talks about the Underclass and wealth redistribution, whilst whooping it up in expensive hotels. Next.
''As for the price increases, yes of course they rise pretty much together''
Agreed, but we;ve heard what is NOT causing the sharp increases in energy prices. Its not green taxes - stripping them all out doesn;t take that much off bills. And its not greedy energy companies, their margins are not spectacular.
So what is it??
Surely it must be supply and demand. Reducing supply (ie turning away from coal) whilst demand remains constant = higher prices. That's economics 101 isn;t it?
My understanding was that we used more Coal in 2012 than in 2011, and we still seem to be using lots of it this year, so that idea appears to be contradicted by the facts.
I've just checked the DECC stats and my memory is right, there was a massive change from gas to coal last year - in the media it was said this was because the US was exporting cheap coal it wasn't burning since gas was now so cheap there.
The main switch away from coal in the UK was during the 90s, when North Sea gas was so cheap.
Am I the only one who thinks this cartoon is in really bad taste. There are people who have to decide if they can eat or heat the house and it is no laughing matter. Some topics are too sensitive and should be the subject of sympathy not worthless attempts at humour.
It is too easy to patronize. Though to some he cut a pretty ridiculous figure while we are governed by the sons of multi millionaires pontificating about people getting off their backsides to work for the minimum wage you don't need a massive imagination to see where he's coming from.
There is something rotten at the core of our society and that's all he was trying to say. He's noticed it and while this government is in power behaving in the arrogant unsympathetic way they are there will be many others who are noticing it too.
So that's the famous Paxman beard.(no TV here) It suits him. He seems calm and sane. But the other bearded one looks like a face peeping out of his own fundament. He works by patching together a series of verbal riffs. I don't think I'd like to see him put in charge of anything.
Am I the only one who thinks this cartoon is in really bad taste. There are people who have to decide if they can eat or heat the house and it is no laughing matter. Some topics are too sensitive and should be the subject of sympathy not worthless attempts at humour.
Marf's cartoon stands in a long tradition of satirical cartoons, and the way in which it combines two important issues - fuel poverty and the pressure on models to be starve themselves - is very clever, as well as being funny.
It is a joke that I can imagine some of the people who have to face the difficult decision between heating and eating would make themselves, if they make the connection.
It is too easy to patronize. Though to some he would have cut a pretty ridiculous figure while we are governed by the sons of multi millionaires pontificating about people getting off their backsides to work for the minimum wage you don't need a massive imagination to see where he's coming from.
There is something rotten at the core of our society and that's all he was trying to say. He's noticed it and while this government is in power behaving in the arrogant unsympathetic way they are there will be many others who are noticing it too.
Particularly touched by his attack against 'corporations' - presumably the same ones that bankroll his film career, publish the books that made his fortune, and build the uber smart hotels he lives in?
Isn't he close friends Jemima Goldsmith? How does that gel with his rant against the super rich?
''As for the price increases, yes of course they rise pretty much together''
Agreed, but we;ve heard what is NOT causing the sharp increases in energy prices. Its not green taxes - stripping them all out doesn;t take that much off bills. And its not greedy energy companies, their margins are not spectacular.
So what is it??
Surely it must be supply and demand. Reducing supply (ie turning away from coal) whilst demand remains constant = higher prices. That's economics 101 isn;t it?
My understanding was that we used more Coal in 2012 than in 2011, and we still seem to be using lots of it this year, so that idea appears to be contradicted by the facts.
I've just checked the DECC stats and my memory is right, there was a massive change from gas to coal last year - in the media it was said this was because the US was exporting cheap coal it wasn't burning since gas was now so cheap there.
The main switch away from coal in the UK was during the 90s, when North Sea gas was so cheap.
OK. It doesn't matter whether we use 80% coal, and 20% gas, or 100% gas - the price will be set by the marginal plant, which will almost always be gas.
So, last year the price of coal fell, and therefore if you owned a big coal fired power station you "had it off". Nevertheless, we do not have enough coal fired power stations to meet all of our demand, so coal could not set the price. (The difference, IIRC, between coal and gas generation costs is known as the dark spread.)
A few years ago, coal was expensive, and gas cheap. At that time, natural gas plants basically ran all the time, and coal was the marginal supply and therefore set the price.
"billionaire plutocrat who’s squeezing the life out of a vital piece of UK infrastructure."
The same one who bought up failing sites, and made them work as businesses keeping 15,000 people in work? There are many ways of looking at this story.
''As for the price increases, yes of course they rise pretty much together''
Agreed, but we;ve heard what is NOT causing the sharp increases in energy prices. Its not green taxes - stripping them all out doesn;t take that much off bills. And its not greedy energy companies, their margins are not spectacular.
So what is it??
Surely it must be supply and demand. Reducing supply (ie turning away from coal) whilst demand remains constant = higher prices. That's economics 101 isn;t it?
My understanding was that we used more Coal in 2012 than in 2011, and we still seem to be using lots of it this year, so that idea appears to be contradicted by the facts.
I've just checked the DECC stats and my memory is right, there was a massive change from gas to coal last year - in the media it was said this was because the US was exporting cheap coal it wasn't burning since gas was now so cheap there.
The main switch away from coal in the UK was during the 90s, when North Sea gas was so cheap.
OK. It doesn't matter whether we use 80% coal, and 20% gas, or 100% gas - the price will be set by the marginal plant, which will almost always be gas.
So, last year the price of coal fell, and therefore if you owned a big coal fired power station you "had it off". Nevertheless, we do not have enough coal fired power stations to meet all of our demand, so coal could not set the price. (The difference, IIRC, between coal and gas generation costs is known as the dark spread.)
A few years ago, coal was expensive, and gas cheap. At that time, natural gas plants basically ran all the time, and coal was the marginal supply and therefore set the price.
But with coal, all else being equal one rips through the north sea gas more slowly than otherwise thus the marginal cost will rise more slowly than it otherwise would have...
And your (Correct) logic acknowledges that if we had alot of coal still on tap they would quite rightly be a very profitable element of the mix.
Edit:
1) So, last year the price of coal fell, and therefore if you owned a big coal fired power station you "had it off".
2) A few years ago, coal was expensive, and gas cheap. At that time, natural gas plants basically ran all the time
Those statements look contradictory to me ... 2) seems correct
That is a very interesting piece. I tend to think that's the sort of Conservatism that could win votes in the centre and tempt back votes lost to UKIP.
"Ed Miliband plans a new Europe with François Hollande Ed Miliband has agreed to work with the new Socialist President of France to “tilt” Europe away from austerity.
The Labour leader told The Daily Telegraph that the election of François Hollande represented “a significant moment” in which the balance of power shifted away from harsh spending cuts towards the policies of the Left.
That is a very interesting piece. I tend to think that's the sort of Conservatism that could win votes in the centre and tempt back votes lost to UKIP.
The problem is that sometimes the best decisions for the long-term health of the country, and thereby the benefit of everyone, can appear harsh in the short-term.
Whereas Miliband's "prizes prices for all" approach is populist, but can ultimately be harmful.
A windfall tax to fund a fuel duty freeze is the logical political and economic answer as it stops inflation rising and helps people with the cost of living.
Few would claim that motor fuel prices are too low but they are less of a pressing problem currently than household energy prices. Much of the reason for this is that the recent strength of the pound and relative stability in the Middle East has seen oil prices ease or at least remain stable.
The AA produce a monthly report on fuel prices which stated that unleaded fuel rose by only 0.1 pence per litre in the UK on average in September and that the current short term prospect for pricing is downward.
The AA also produce a table of prices in Europe (and the US) which shows that we rank 8th in the highest prices charged for unleaded fuel.
For lovers of yellow charts, I shall post the rankings in a follow up comment.
Cue many - particularly on the Right - rushing to Twitter and the blogosphere to condemn the ‘irresponsible’ union wreckers who had put thousands of jobs at risk.
Far easier to bash the unions than to ask tough questions of the billionaire plutocrat who’s squeezing the life out of a vital piece of UK infrastructure.
Far more fun to bang on, yet again, about Falkirk than to say – as patriotic Brits – that this country will not be blackmailed by oligarchs.
Lol, has he been reading PBTories?
As I said the other day, there's just no need for the modern Tories to continually side with the wrong people - most notably Big Business against ordinary folk - in order to be true to their values.
There's no need for them to be the Nasty Party but that, bafflingly, is what they've chosen to become. And it has, and will continue to, cost them election after election.
That is a very interesting piece. I tend to think that's the sort of Conservatism that could win votes in the centre and tempt back votes lost to UKIP.
The problem is that sometimes the best decisions for the long-term health of the country, and thereby the benefit of everyone, can appear harsh in the short-term.
Whereas Miliband's "prizes prices for all" approach is populist, but can ultimately be harmful.
Yes, I was thinking of adding something along those lines, but couldn't work out how to do so. Globalisation obviously presents an enormous challenge, but Conservatives need to think of a better response than to criticise every attempt by a Union to protect pay and conditions.
Comments
Agreed, but we;ve heard what is NOT causing the sharp increases in energy prices. Its not green taxes - stripping them all out doesn;t take that much off bills. And its not greedy energy companies, their margins are not spectacular.
So what is it??
Surely it must be supply and demand. Reducing supply (ie turning away from coal) whilst demand remains constant = higher prices. That's economics 101 isn;t it?
* VAT (reduced rate)
* Corporation tax on profits
* PAYE Income tax for employees
* Employees National Insurance
* Employers National Insurance
* Tax on shareholder dividends (for higher-rate tax payers)
http://www.youtube.com/watch?feature=player_embedded&v=3YR4CseY9pk
Or is demand rising? An increasing population must be using more power.
The major reason that energy prices are rising is that the marginal cost of production is set by natural gas. (Economics 101: the marginal supplier, i.e. an efficient CCGT, sets the wholesale price.) In the UK, we have domestic natural gas production declining as North Sea fields become depleted, and we also see declining volumes from Norway where we had negotiated long-term fixed price contracts. Essentially, the amount of $8/mmcf gas we consume is falling, and is being replaced by LNG imports, which are typically around $15/mmcf.
If that's the case RCS, then there's little that anybody can do about rising gas and leccy prices, despite all the hullabaloo.
Why doesn't everybody just admit it?
I've just checked the DECC stats and my memory is right, there was a massive change from gas to coal last year - in the media it was said this was because the US was exporting cheap coal it wasn't burning since gas was now so cheap there.
The main switch away from coal in the UK was during the 90s, when North Sea gas was so cheap.
"I assume everyone has seen this;"
It is too easy to patronize. Though to some he cut a pretty ridiculous figure while we are governed by the sons of multi millionaires pontificating about people getting off their backsides to work for the minimum wage you don't need a massive imagination to see where he's coming from.
There is something rotten at the core of our society and that's all he was trying to say. He's noticed it and while this government is in power behaving in the arrogant unsympathetic way they are there will be many others who are noticing it too.
So that's the famous Paxman beard.(no TV here) It suits him. He seems calm and sane. But the other bearded one looks like a face peeping out of his own fundament. He works by patching together a series of verbal riffs. I don't think I'd like to see him put in charge of anything.
'Are we the baddies?'
http://tinyurl.com/n9f779u
It is a joke that I can imagine some of the people who have to face the difficult decision between heating and eating would make themselves, if they make the connection.
Isn't he close friends Jemima Goldsmith? How does that gel with his rant against the super rich?
So, last year the price of coal fell, and therefore if you owned a big coal fired power station you "had it off". Nevertheless, we do not have enough coal fired power stations to meet all of our demand, so coal could not set the price. (The difference, IIRC, between coal and gas generation costs is known as the dark spread.)
A few years ago, coal was expensive, and gas cheap. At that time, natural gas plants basically ran all the time, and coal was the marginal supply and therefore set the price.
The same one who bought up failing sites, and made them work as businesses keeping 15,000 people in work? There are many ways of looking at this story.
Very good reply to Roseree64. I was trying to frame one but yours is much better
And your (Correct) logic acknowledges that if we had alot of coal still on tap they would quite rightly be a very profitable element of the mix.
Edit:
1) So, last year the price of coal fell, and therefore if you owned a big coal fired power station you "had it off".
2) A few years ago, coal was expensive, and gas cheap. At that time, natural gas plants basically ran all the time
Those statements look contradictory to me ... 2) seems correct
http://www.bbc.co.uk/news/technology-24658177
"French jobless claims surge in September to record high"
http://www.reuters.com/article/2013/10/24/uk-france-economy-idUKBRE99N0V120131024
"Ed Miliband plans a new Europe with François Hollande
Ed Miliband has agreed to work with the new Socialist President of France to “tilt” Europe away from austerity.
The Labour leader told The Daily Telegraph that the election of François Hollande represented “a significant moment” in which the balance of power shifted away from harsh spending cuts towards the policies of the Left.
http://www.telegraph.co.uk/news/politics/ed-miliband/9259475/Ed-Miliband-plans-a-new-Europe-with-Francois-Hollande.html
Whereas Miliband's "prizes prices for all" approach is populist, but can ultimately be harmful.
A windfall tax to fund a fuel duty freeze is the logical political and economic answer as it stops inflation rising and helps people with the cost of living.
Few would claim that motor fuel prices are too low but they are less of a pressing problem currently than household energy prices. Much of the reason for this is that the recent strength of the pound and relative stability in the Middle East has seen oil prices ease or at least remain stable.
The AA produce a monthly report on fuel prices which stated that unleaded fuel rose by only 0.1 pence per litre in the UK on average in September and that the current short term prospect for pricing is downward.
The AA also produce a table of prices in Europe (and the US) which shows that we rank 8th in the highest prices charged for unleaded fuel.
For lovers of yellow charts, I shall post the rankings in a follow up comment.
AA Fuel Price Rankings
How's that going?
Frau Merkel still Chancellor?
Far easier to bash the unions than to ask tough questions of the billionaire plutocrat who’s squeezing the life out of a vital piece of UK infrastructure.
Far more fun to bang on, yet again, about Falkirk than to say – as patriotic Brits – that this country will not be blackmailed by oligarchs.
Lol, has he been reading PBTories?
As I said the other day, there's just no need for the modern Tories to continually side with the wrong people - most notably Big Business against ordinary folk - in order to be true to their values.
There's no need for them to be the Nasty Party but that, bafflingly, is what they've chosen to become. And it has, and will continue to, cost them election after election.
I always had a soft spot for Kenneth Baker and he's got Gove spot on. It seems all Thatcher's ex cabinet are now falling in line behind Russel Brand