by Jerome a Paris
Mon Jan 7th, 2008 at 08:26:31 AM EST
Darling seeks UK energy price talks
Alistair Darling has called for urgent talks on whether sharply rising energy prices are justified, amid fears that energy companies could undermine his anti-inflation strategy and hit the poor.
Oh, boo-fuckin-hoo. After years of telling us how great the UK liberalised market is, and how competition allows for price signals to let consumers and producers take the best decisions as to their energy spending or investments, they have to ask if price increases are justified??
Well, either it's a functioning market, and price increases are justified by some combination of higher demand and lower supply, or it's not a functioning market and can we please stop the sanctimonious lesson-making about deregulation?
Except ... of course, if it's somehow because of Brussels and evil continental companies abusing the poor Brits. Yep, as expected, that ugly argument, together with putting the blame on evil Russians, has come up. More below.
Mr Darling wants reassurance that energy companies are not using the short-term wholesale price fluctuations as an excuse to push up prices, when most have long-term energy contracts.
What a stupid, stupid argument. Market prices are set by demand and supply, not by production (or supply) costs. That's the whole point of marginal pricing: the price for ALL sellers is that of the most expensive unit needed to clear demand. If demand is high, and requires supply from expensive providers, then those with low cost supplies make a lot of money. This is economics 101.
Don't they even know how a market functions? Gah, the hypocrisy is just staggering (just as, frankly, is the ignorance of the public that can still be taken by such arguments).
Mr Darling’s aides say the meeting does not reflect any criticism of Ofgem, which does not regulate energy prices in what is deemed to be a competitive market.
The chancellor does not have any formal powers to intervene, but his involvement will increase pressure on the energy sector to explain what are expected to be a series of big price rises.
We have a great market, and a great regulator, so we're not at fault. It's those pesky suppliers (who all happen to be foreigners, so we can bash them without restraint).
And in a free market, of course, suppliers do not have to justify their prices - the market takes care of that: either they sell at that price, or they don't sell. and if there were collusion or anti-competitive behavior, surely the anti-trust authorities would get involved, right, rather than the Chancellor of the Exchequer? This gets soooo confusing.
The prospect of UK consumers being hit by soaring energy bills is not only bad news for the government drive to hold down inflation, but could have wider ramifications in the rest of Europe.
Britain is seeking to open up the EU energy market, citing the UK’s deregulated sector as a model. France and Germany claim that a fragmented sector has led to a lack of long-term investment in new supplies and infrastructure.
Sadly, the article does not pursue that point. what would be the ramifications for the rest of Europe? Yet another proof that deregulation does not work and must be stopped and reversed? Or a new push to push the UK's insane system to the rest of Europe so that our system get to be just as fucked up?
The article gets tantalizingly close to admitting that it is the former, but does not quite state it. I guess we'll take small victories where we can...
Centrica, meanwhile, said demand for UK gas was also strong from continental Europe. European energy suppliers that need gas at short notice tend to buy it from the more competitive UK market, increasing demand.
Ah, back to the script. The UK market is more competitive, thus cheaper, and thus UK gas gets pinched by evil continentals. What's the complaint about, again? If prices are lower than on the continent, surely that's a good thing, and an argument that can be used to show that liberalisation works?
Or are they somehow arguing at the same time that continentals are abusing the UK market by selling higher than they could, and yet buying on that same UK market for cheaper than elsewhere?
How stupid do they think we are? Plenty, obviously.
- the UK market is truly cheaper, but price increases are still intolerable, and thus the whole focus on market prices is politically intenable, as prices can go up as well as down. Better go back to fixed prices, then;
- or the UK market is not realy cheaper, and the arguments about liberalisation being the most efficient way to lower prices become quite tenuous too.
I wonder which one is the most inconvenient. Oh wait, it's only because of Putin and Brussels that this is even happening!