Gas prices being artificially inflated by European monopolies, claims report |
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Tue, 06 Sep 2005 09:05
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LONDON - A study conducted by leading economic forecaster Global Insight says that Britons are bound to end up overpaying £10 billion next year on their gas bills as stringent laws in the European markets prevented the emergence of competition in the gas segment. The team at Global compiled this report for British Gas owner Centrica.
This means that British families pay an extra £186.60 a year for their gas bills just because other European Union countries did not liberalize the market in this segment. The report has named France as one of the countries that are refusing to ratify laws to allow competition in the gas sector, thereby contributing towards the skyrocketing prices. "There can be little doubt that UK consumers are paying the price for Europe's failure to sufficiently open its energy markets as we become increasingly dependent on gas imports," the report said.
Over the last two years UK gas suppliers including Centrica have been increasing gas prices regularly, much to the discomfort of the consumers. And the scenario does not look any better in the future as the gas, which is being currently imported through a pipeline to Belgium, looks like becoming the lifeline for the UK. Global Insight said that the lack of competition meant that any increase in oil prices, which have spiraled to $70 a barrel, would continue to upset the prices in the gas market. The rise in oil prices is forcing suppliers to increase gas prices, but does not reflect the ample reserves that are available, said the report. The intimate link between oil and gas prices means that for every $10 a barrel rise in the oil price, gas would rise by almost 7 pence a therm, the report added. In the UK worries about the decreased output from the North Sea fields as well as rising imports have seen gas prices spiral out of control in the winter.
The report author Trevor Sikorski squarely blamed the outdated monopolies in the European markets, “UK consumers are paying the price for Europe’s failure to sufficiently open its energy markets as we become more dependent on gas imports. Gas prices are index-linked to oil and — as oil prices spiral — this is pushing gas prices much higher than they really should be,” he said.
According to the report, domestic users stand to lose £3.9 billion a year, businesses were poorer by £2.7 billion a year and the power generation firms were being hit by a loss of £3.4 billion a year.
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