Pyramid Comment

This journal takes an alternative view on current affairs and other subjects. The approach is likely to be contentious and is arguably speculative. The content of any article is also a reminder of the status of those affairs at that date. All comments have been disabled. Any and all unsolicited or unauthorised links are absolutely disavowed.

Sunday, November 14, 2010

Energy Price Increases (2010)

Dr. Vince Cable made indirect comment (March 2010) about massive energy price rises, without using a better description other than simply 'large' profits and spreading the effect between the supermarkets and energy companies as though they belong together in the same context. But this was pre-election rhetoric and he was at the time the Liberal Democrat Treasury spokesman.

  • "With large profits posted by supermarkets and energy companies it would appear that some of them are taking advantage of their strong market position over their suppliers and customers"
Both British Gas and Southern Electric have both announced inflation-busting increases. British Gas (10.12.10) will be 7% and Southern Electric (actually 9.4%) (01.12.10), but failing to qualify the amount of the rise to consumers, simply describing as 'rates shown' (Southern Electric literature). This outstrips inflation hugely (2 to 3 times the UK rate), and is a prime contributor to inflation. However, it is not clear why there is a difference of 2.4%. As always it is predictable that price rises will come just ahead of the heaviest charging period. Southern Electric has also declared a reduced profit for the the last 6 months. It blamed a lack of wind for a 16% fall in output from hydro-electric schemes and wind farms and presumably has

little to do with the warmer summer
months requiring less energy 

But the group still raised its dividend 6.7% to 22.4p. Similar to the banking sector allegedly paying out huge bonuses when profits are generally poor. Banks (to some extent only) rely on the consumer. And the consumer is being crushed. And profits are down. Odd that one, but this is business and once again the parasite can be seen feeding off the host. It shouldn't be forgotten that the parasite regards the host as stupid. It imagines itself as greatly superior, it being just a group of (very ordinary) greed-motivated business people.

  • When rail companies face a dwindling user-base, the initial reaction is always raise the prices. This leads to a smaller user-base as people find alternatives. But the cost of fuel (petrol) will affect outcomes. Cost of fuel and cost of travel both increase and somewhat cancel each other out. Just coincidental, of course.
Reduced profit only compares to an earlier value and by definition must be less. That fails to define what is a healthy or business damaging profit. Only that it is less. In any case if the amount is down then just charge the consumer to make up the (business plan and shareholder dividend) shortfall.

  • To pay a dividend to keep the shareholders happy, is the amount paid and later recovered through raised prices? Which comes first, the cart or the horse? DA
That's precisely what employees do when they are struggling. Ask for more. Comparisons only dodge the actual values. Comparatives never define absolutes, only indicating more or less and never quantifying (actually 9.4%. Allegedly). The real numbers are not hidden, but just made difficult to uncover.

Energy companies just demand more.
The parasite behaves predictably

British Gas - The Attitude
British Gas - The Disaster
British Gas - The Hiding
British Gas - The Owner (Centrica)
British Gas - The Round Up

Crude Oil - Price History and Analysis
EDF And British Energy

Southern Electric
Southern Electric - Calendar Date
Southern Electric - North Sea Gas And Hess Energy
Southern Electric - The Deceit
Southern Electric - The Letter
Southern Electric - Update

  • Southern Electric is part of the Scottish and Southern Energy Group. Southern Electric is based in Maidenhead, Southern Electric supplies gas and electricity across Great Britain.
  • And in a gloriously patronising comment, chairman of the group Lord Smith of Kelvin said: "2008/09 was a tough year, dominated in the first half by very high wholesale prices for electricity and gas.
It was a tough year for everyone, especially the consumer and the usual justification is traditionally very high wholesale prices for electricity and gas. This is the same type of rhetoric used by the coalition government when any cut is announced by starting with something like "...the inherited deficit from the last government...". Typical non-speak. Incidentally, inflation busting increases are still promoted as the cause of inflation (they are a cause), but as always this ignores the increased interest on loans and the consequential debt as the real reason behind inflation. And growth. It's how money really works: debt and interest, but always involves only Winners And Losers.