Why gas prices are so politically hot

Gas hob

What's the bit of economic news that voters have noticed more than any other since the coalition came to power?

Was it the £6 billion of spending cuts made six weeks after they came to office?

Or the day the chancellor had to admit that the government had missed its borrowing targets? Or the moment inflation hit 5%? No, none of those.

It was, researchers have told ministers, the day one of the energy firms increased its prices by 20%.

This was no mere statistic or forecast or description of the general state of the economy. It was over two hundred quid out of the pockets of the average household who bought their energy from that company and the prospect of the same for millions of others.

That's why the government has reacted so swiftly to allegations that the energy firms are price fixing.

It's why David Cameron said something his energy secretary Ed Davey knew nothing about when he promised to legislate to ensure customers paid the lowest tariff available. Behind the scenes they're still trying to work out how to refine and deliver that promise.

It's why there is a ferocious Whitehall row going on about new green energy targets: the Treasury fears they will drive up bills still further whilst the Department for Energy and Climate Change (DECC) insists they will create green jobs for the future.

George Osborne believes that cheap gas could boost the economy just as North Sea oil once did.

The energy secretary is insisting that that should not mean abandoning targets for electricity from renewable sources.

All this in a week when British Gas is imposing a price rise of 6% for gas and electricity meaning that, according to the energy account transfer service uSwitch, the average household bill for a dual-fuel British Gas customer will go up from £1,260 to £1,336 a year.

This issue of gas is hot. Very hot.

Nick Robinson Article written by Nick Robinson Nick Robinson Political editor

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  • rate this

    Comment number 75.

    It would be helpful to nearly everyone in the country if the government took the necessary powers to prevent all increases in energy prices until the investigation into price fixing/rigging is completed.
    Come on 'Pasty George' we are all in this together.

  • rate this

    Comment number 74.

    Human rights legislation is not Utilitarian. It looks at how an individual is treated. It is reactive, that is it contemplates a given situation at a given time. The BBC and media do not report correctly because it is not in their interests to do so. The issue concerns the criminal law system in Jordan, and other nations. The Government and Liberty silent, now that's the story. Is there a journo?

  • rate this

    Comment number 73.

    Consulted energy industry regulator; OFGEM's website to discover what is happening about the pricing review & investigation into gas price fixing. No information at all was to be found. What is due to happen and when?

    You could understand some suggesting that these reviews are just a sop and a way to kick the issues into the long grass.

  • rate this

    Comment number 72.

    The Gov't won a recent fuel tax increase parliamentary vote. 2 UK oil majors recently posted combined £7.5bn profits for Q3 alone, yet GO announced £3bn tax break & an annual £45m for oil industry in March.


    Many share Nadine Dorries' view that Mr Osborne is out of touch & feels not their pain on fuel costs.

  • rate this

    Comment number 71.

    Some say Nadine Dorries has a point, with her oft repeated quote about the occupants of No's 10 & 11 Downing St. It is hard to argue against it, when it took the PM until 19/10/12 & his " transfer to cheapest tariffs" policy announcement to realise consumers were struggling with energy costs, after above inflation increases since 2010.

  • rate this

    Comment number 70.

    "Don't worry they will be talking Gay marriage before the weeks out, again!"

    Today's headline from Gideon:

    "Tories won't win next election if we don't back gay marraige"


  • rate this

    Comment number 69.

    @51 Saga!
    Again! Someone as sophisticated as you making a suggestion like that? I'm horrified.

    Banks have genuine competition between them and customers (in the UK) have alternatives: B/socs offering clearing, Post Office accounts, etc.

    The equivalent is not available in the power and water sectors.

  • rate this

    Comment number 68.

    We need to renationlise power and water. These are essential, monopolies and strategic. To have them in private, and foreign private hands is not forgivable.
    Even if cost was higher if these were nationalised (which it won't be as they won't be profit making) the cost is spent on employing people in the UK and cutting our taxes. Public ownership will mean lower costs to us all.

  • rate this

    Comment number 67.

    The solutions are simple. More storage, to take us to 90 days strategic reserves and start fracking, These are simple moves that will take the seasonal heat out of it. And, if necessary, have the energy providers having to buy direct from the storage that the state is providing at the state's price. But, how many of you remember how much you used to complain when it was all nationalised?

  • rate this

    Comment number 66.

    How does Ed Davey plan to punish these firms? By giving them a fine Lmao! They'll just put up prices & get us, the good British public to pay for it! Any sensible punishment should be to reduce the price by 20% so as to give something back to the very people they've screwed over in the first place. Common sense will not prevail however & these companies will continue to profit. Total joke.

  • rate this

    Comment number 65.

    It is obvious to anyone with any common sense that public services like gas, power, water, rail, possibly telecoms, should be nationalised. That is the only way that prices can be reduced to a minimum. The current situation, where companies exist to make the most profit, and are duplicating each others services is plain ridiculous. How can that mean the best deal for the end-user?

  • rate this

    Comment number 64.

    Autumn 2011, suppliers announce price hike, government announces enquiry.
    Autumn 2012, suppliers announce price hike, government announces enquiry.
    November 2012, accusations that market fixing, government announces enquiry.
    When might we expect a report?

  • rate this

    Comment number 63.

    Not happy the way this article is tucked away in this section. If you look under the HYS section, its not listed, strange for an important issue which affects US ALL !!!

  • rate this

    Comment number 62.

    Inflation nudging back up .
    Less room for the vital QE .bet Osbourne cans the inflationary fuel duty rise and looks to put pressure on gas .
    Otherwise the BOE money train might be cancelled .

  • rate this

    Comment number 61.

    Look at the comments here and consider why are we given so few opportunities to publically comment upon articles on the BBC internet service? There have been so many times I would have liked to add comments upon 'local' issues but have been unable to do so. Instead, I have had to sit back and look at totally biased BBC pieces e.g. anything whatsoever to do with wind factories/turbines.

  • rate this

    Comment number 60.

    Perhaps they buy their gas from the same place Starbucks buys it's coffee beans

  • rate this

    Comment number 59.

    Are we sure that Barclays isn't involved? They've got specialists working in this area haven't they?

  • rate this

    Comment number 58.

    Nationalise the Energy Companies again then. Simple.

  • rate this

    Comment number 57.

    And they are off. So far all that is known is that one one day some traders may have LOWERED a reported price, possibly to make some money on financial instruments.

    This has changed into an assumption of full blown rigging by everyone to raise prices.

    Changes may or may not be needed but lets debate what's reported not make up a different story.

  • rate this

    Comment number 56.

    Big companies simply vying with each other to determine which set of shareholders make money from the hapless customers. Us.

    Is this how the free market works?


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