Precisely Why Are Domestic gas Prices Still Really At High Level?



Wholesale energy prices increased significantly from December 2007 as oil prices climbed steadily all through the year eventually peaking at $147 barrel in July 2008 (Some 'experts' were predicting that oil would hit $200 dollars a barrel right at the end of the year). The impact of the "credit crunch" drove oil prices down to below $60/barrel towards the end of the year, less than half of their peak in July, and Electricity and Gas prices soon followed.



Suppliers argue that in 2008 when prices started to rise they did not pass on the increases straight away, but British Gas raised gas prices by 35% and electricity prices by 9% in 2008 just 6 months after a 16% increase - the only decrease we have seen so far since is a 10% reduction.


Suppliers argue they may have 'brought' energy upfront at higher prices. Many of the 'big 6' suppliers are vertically integrated and a large number of them have enough power generation to pay for their supply businesses therefore they don't ought to purchase from the market regularly (although retail will argue they generally do).


While suppliers cannot adjust their prices on a daily basis for household / domestic supplies like they are able to and do with the commercial sector simply because of the numbers involved, they have had an abundance of opportunities over the last year to successfully pass on more of the falls.


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