Manipulating Wholesale Natural Gas Prices

The news that traders in wholesale gas might well have manipulated gas prices fraudulently is being taken seriously enough to be investigated by OFGEM and the Financial Services Authority. The claim was made by a whistle blower, Seth Freedman, and while we should always presume innocence I am not unsurprised by the claim. Continue reading

Goldman Sachs – your dedicated financial advisor

The world is slowly beginning to understand that if you allow a key industry or service to be controlled by a handful of enterprises, they will compete against the public interest rather than compete against each other. In the United Kingdom there are a handful of energy companies selling precisely the same products at virtually the same prices. The differences between them do not make a market. Continue reading

Energy companies, banks and windfall taxes

Should energy companies have to pay a windfall tax? There are many people, including a significant number of Members of Parliament feel that the energy companies should pay a windfall tax. The argument goes that the energy companies have to pay 30% more for their wholesale costs and they are imposing a 30% price increase on their retail prices to their customers, which means that they are getting a greater profit per unit sale by imposing a price increase on retail charges which significantly exceeds what they have to pay on whole charges.

Similarly the banks are now into windfall territory, but not in order to make larger profits. They are exploiting their position to bolster up their reserves having lost vast amounts of money in buying dud subprime mortgages which were not worth anything like the sums they paid for them. Continue reading