Gas Prices and Gas Profits

With gas prices rising 35%, there is increased scrutiny about the profits that Gas companies are making.

Centrica announced an 88% rise in pre tax profits to just under £3billion for the first six months. Centrica attriuted it partly to ‘changes in accounting’

Gas wholesale prices have reason in recent months. But, for several months, Centrica benefit from relatively low wholesale prices compared to retail prices.

An estimated 6 million now have to spend more than 10% of their disposable income on fuel. This is often defined as fuel poverty.

The average gas bill for British gas consumers is now £1,300.

Shell announced profits of £7.9 billion in the first 6 months of the year. Shell have benefitted from the rising price of oil.

The market for Gas has an element of competition, but British Gas still retains monopoly power with many customers reluctant to change gas supplies. There is certainly little evidence of price competition at moment.