Forward natural gas prices rise by 25%

Centrica is preparing the market in natural gas for another price increase. Throughout the world energy and fuel is becoming more and more expensive. Of course, from day to day prices fluctuate but the long term forward prices are rising.

In fact forward whole natural gas prices per btu are 25% higher now than they were this time last year.

When the world is in turmoil, be it economic or political two things rise in price. The first is fuel, such as oil and gas and uranium, and the second is metals, particularly precious metals like gold, silver, platinum and palladium. Energy prices rise because of threats to supply and increasing demand; precious metal prices rise because people increasingly distrust government currency and seek a safe hedge to shield them from the storms of inflation and excessive taxation.

Energy companies like Centrica may find their profits fluctuate with rising prices. In the first four months of 2011 Centrica report that households in the United Kingdom consumed 19% less gas than compared with the previous period in 2010. In both years the winter weather was colder than usual but it seems that people are not rationing their energy use, for fear of having a bill that it too expensive to pay, rather like many more people are using trains to avoid the very expensive petrol that you use if you take your car. This is a form of self rationing.

I cannot see energy prices falling significantly, although there will be falls and rises. I can see the possibility of very large prices rises for energy and shortages so that real rationing is introduced in some places.

Where politics and rhetoric and attempts to use the market as a means of controlling climate change failed the ultimate means may well be successful – energy prices becoming in real terms very expensive.

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