British Gas Cuts Electricity Prices !

[Brahmanyan]

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Today's BBC news brings a news item which can happen only in Great Britain.

"British Gas and SSE announce price cuts ,

British Gas has cut its electricity prices by 5% with immediate effect,
while SSE will reduce its Gas tariffs by 3.8% on 26th March.
The moves come a day after EDF Energy announced plans to cut its domestic gas tariff by an average of 5% owing to low energy use during the mild winter."

Full story is available in the following URL:
BBC News - British Gas and SSE announce price cuts

Just compare this with our Governments' welfare activities of twice a month increase in fuel and periodical increase in prices of products under Governments' Control.

"God save trhe Queen",
Regards,
Brahmanyan,
Bangalore.

 

[kunjuppu]

B,

good news for britishers.

the graph below gives the reason why. there is a glut of natural gas around the world. classic economics of supply and demand.

BG can lower price and still make decent profit. i agree not many companies will do this. they would rather have windfall profits - particularly oil majors like exxon, BP or shell.

re india, i think, the market model for petroleum products is different. maybe.

here in canada, petrol at the retail pump varies almost daily, and reflects the international brent crude price. ... i am not so sure, if this type of fluctuation will go down well in india..i am not familiar with indian govt policies re petrol. i am under the impression, there is a fixed price, which is an indirect subsidy to the middle class, which consumes the most, through gas cylinders and two wheelers. i could be wrong here ofcourse.

http://www.indexmundi.com/commodities/?commodity=natural-gas

Natural Gas Prices and News, NYMEX Natural Gas prices, charts, and live feeds.

 

[ShivKC]

Today's BBC news brings a news item which can happen only in Great Britain.

"British Gas and SSE announce price cuts ,

British Gas has cut its electricity prices by 5% with immediate effect,
while SSE will reduce its Gas tariffs by 3.8% on 26th March.

what happening in the land of 'god save the gracious queen' is not a big deal.

after all its electricity price cut, even if not, no one would die of starvation without electricity.

have a look at what Kamarajar or MuKa did.. one gave a noon meal freely to all the students, and another gave rice at 1Rs/Kg.

Can you imagine Brits getting wheat flour at 1penny/KG? is so, they are great.

 

[prasad1]

Brahmanyan,

Sir I generally do not differ from your views.
But this is comparing apples and oranges.
In a free market situation the government allows the price to fluctuate according to the market. In a controlled economy government sets the price rather arbitrarily, but even government can not subsidize indefinitely, and eventually has to correct it.
You can not not get something out of nothing. If you allowed the markets to set price you will have price fluctuation daily, like you have in the vegetable market. Then the price of diesel may be more than petrol as is the case in USA.

Governments try to manipulate the market for the best interest of the majority (or the vote bank). If there was a free market then relience petroleum can compete with Indian Oil on price. Currently they are forced to export as the price set by government is unsustainable. The crude is an international commodity, and India has to buy with hard cash at the prevailing price.

Electricity price too fluctuates daily, but it is regulated industry, that means state public utility commission (PUC) has to approve the price.

The utility company submits the price demand based on manufacturing cost to PUC. PUC may or revise the price demanded. British Gas and SSE did not reduce the cost of electricity out of goodness of heart, it had to lower the cost because the cost of producing electricity went down and PUC will demand that cut.

 

[ShivKC]

yes, well said.

[h=1]Subsidy, modern economy is all against it![/h]