why are energy prices rising in the UK, when their main sources is its own North Sea gas?
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Where the gas comes from doesn’t matter that much as the UK doesn’t actually own its gas supplies – rather, privately owned corporations such as British Gas control the gas and are allowed to export it to whomever they please.
If the price that other countries are willing to pay goes up then those companies will simply sell to those countries instead.
Norway is the UKs primary gas supplier. It is North Sea gas, but it’s Norway’s North Sea gas.
It’s a free market.
The producer of gas can ask for international market rates or it can sell for the domestic rate.
There’s literally no reason for them to sell it at domestic rates when you can get 10x the price in international markets.
But to answer the question.
Greed. That’s it.
They give the North Sea Oil huge tax breaks with the expectation that it’ll be good for the economy and they’ll keep prices competitive. And the oil companies are laughing all the way to the bank.
Commodity spot prices aren’t location dependent and established long-term contracts are somewhat dependent on Russia fulfilling their supply obligations at agreed upon pricing.
Bunch of variables, really. But proximity pricing is not one of them.
A lot were sold to french companies who have a monopoly on UK energy. #brexit?
We maintain a fiction that we are incapable of administering our own assets and must pay foreigners to do so, because past British governments made the decision that they wanted the country’s resources and assets to be privately owned.
It is possible that they entertained the mistaken belief that these owners would be British or at least pay British tax – something that is less true than many would like to see – however it’s a persistent and possibly quite true belief on the part of the British people that the main qualification these owners had was the ability to donate money to the ruling party or provide good publicity to it.
The upshot is that Britain doesn’t supply its own gas, in legal terms: it buys gas on the international market. It just so happens that this gas is extracted in Britain by British people and sold to British consumers, but financially speaking that is mere happenstance.
Britain prides itself on its low levels of everyday corruption – you do not have to tip your police officer or your exam board – but there is a persistent and possibly true belief that government contracts, natural resource extraction, ownership of large assets and so on were not allocated fairly, and the regulatory regime has been largely set up to benefit friends of those in power.
Isn’t it free market? Russia decided to cut Germany gas supplies, so Germany is buying more in Norway, a lot more. And maybe Germany is willing to pay more for gas, the UK. Germanys industry is based on a never ending gas supply… it would pay any price. and this is raising the prices of gas for all.
We have similar issue in Sweden. We’re mainly self sufficient (we actually net export as one of the top countries). But the energy market in Europe is a connected market, and it sets the price for us as well. So right now we have these high prices because somewhere out in Europe someone is willing to pay those insane prices.
I guess it’s how poorer countries feel about harvests, or raw materials. They mine them but can’t buy them because international markets pays more.
I think the difference is that while the principle is similar, energy is harder to move right now. While you mine copper someone can just show up and buy it. Energy makes more sense to produce locally and have local prices. Big corps wouldn’t want it though because if you can set a price for an entire population based on who’s the most desperate makes for higher profits
Source does not determine price.
If gas comes from the US or Russia and countries are buying it from them for £2
gas from the north sea will also cost £2. They’re not going to sell it to the UK for £1 just because it’s sourced there. They will sell it for £2 and it doesn’t matter who buys. So if the UK wants gas they must also pay £2.
To get the money back the UK has to tax its producers. But that leads to gas being more expensive to produce in the UK and leads to global price increases.
So now if every producer was taxed £1 for each bit of gas produced, the gas suppliers will want to sell the gas for £3. And so the UK buys at £3 but makes £1 from tax, paying £2. Which is the same as if they hadn’t taxed them in the first place.
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