There goes choice and competition

  karmgord 19:19 19 Nov 2010
Locked

Scottish Power announced today 9% rise in its electricity prices & 2% on gas.

click here


Collusion? surely not.

  OTT_B 21:16 19 Nov 2010

Just follow-my-leader, I suspect. Once one makes a move, the rest are free to follow.

  morddwyd 08:36 20 Nov 2010

Nobody shouts collusion when the petrol companies all put their prices up together, or the supermarkets all raise the price of Fray Bentos pies at the same time.

What is it that we have against energy companies?

  Forum Editor 08:49 20 Nov 2010

I wonder when the penny is going to drop.

Energy prices will rise until and unless we can find ways to increase supplies of renewable energy.

It's the simplest equation in the world - fossil fuel sources are being depleted at a rapid rate, and demand for energy continues to rise. You don't have to be an Einstein to work out that prices will increase as the law of supply and demand operates.

There are large fossil fuel deposits remaining to be exploited, but they will become increasingly more difficult (and therefore expensive) to extract.

  jakimo 13:14 20 Nov 2010

' the supermarkets all raise the price of Fray Bentos pies at the same time.'

If only it were just Fray Bentos pies!

  OTT_B 02:21 21 Nov 2010

"It's the simplest equation in the world"

I'm not sure it is as simple. The problem is that greed and that apparently undefinable term 'the market' comes into it.

I understand the sentiment of you post completely, but I think that energy prices are a lot more complex than supply and demand. If it were so simple then why would crude oil have dropped in price by nigh on $120 per barrel in 2008 when consumption dropped by only a relatively minor amount?

Please understand, I don't agree with the implication of karmgord's opening post, but I do disagree that it is only supply and demand that control the prices.

  morddwyd 07:53 21 Nov 2010

Then what else is it pray?

If people don't want to buy the product the price will drop in attempt to persuade them to do so.

If lots of people do want to buy it yhe price will go up, unless the market is artificially manipulated, like diamonds.

  Forum Editor 08:17 21 Nov 2010

"why would crude oil have dropped in price by nigh on $120 per barrel in 2008"

Between 1998 and 2007 world crude prices climbed steadily, due mainly to OPEX quota increases, and the Iraq war (there was a dip when 9/11 happened). The peak price occurred in July 2008, when it reached a record of just over $147. That was partly because of Iranian missile testing.

By October 2008 the price had fallen dramatically, as you say, but you're wrong to say that demand had dropped by a 'minor amount'. A major contributor was the demand for oil in America - it was the lowest on record in May 2008. By December 2008 oil was trading at under $34 a barrel.

All commodities are subject to price fluctuations, and the root cause is always supply and demand. The factors affecting both may be complex, but the basis law applies - reduce demand and prices will fall, and vice versa; as demand rises prices will tend to increase.

Commerce responds to rising prices by seeking ways to cut demand, but - like oil tankers - industries take a while to change course and slow down. There are time lags between a reduction in the oil supply and the fall in demand.

  karmgord 19:32 22 Nov 2010

morddwyd
You are right again so here goes,
The petrol companies collude,as did some airlines,trouble is both proving it and having the will to tackle industries as powerful as the energy companies.

  wids001 08:22 23 Nov 2010

Forum Editor:

Oil reached $147 a barrel because of greedy speculators. This then caused the sub-prime mortgage crises in America which led to the banking collapse.

Tell me I am wrong ... just wait till it happens all over again - and it will!

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