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British Gas (Centrica) Making Monopoly Rip off Profits with New Energy Price Hikes

ConsumerWatch / Household Bills Nov 12, 2010 - 05:09 AM GMT

By: Nadeem_Walayat

ConsumerWatch

Best Financial Markets Analysis ArticleBritish Gas (owned by Centrica) paid propagandists have been busy making appearances on the mainstream broadcast media with misinformation to try and persuade its 9 million retail gas and electricity customers that the announced price hike of 7% from 10th December is justified, when the facts are that British Gas is ripping off its customers by making near monopoly profits as evidenced by a 98% rise in gas profits for the first half of 2010 to £585 million.


The British Gas price hike follows a 9.4% hike by Scottish and Southern and will likely soon be followed by NPower and other providers that effectively operate as an energy supply cartel that allows them to charge monopoly profits on prices that do not reflect the market prices for gas and electricity as the following graphs by Consumer Focus illustrate:

British Gas and other energy providers are screwing the public by overcharging retail customers on Gas and Electricity by at least 40% even after allowing for an healthy profit margin as the British Gas price is 60% above the wholesale market price, which explains why British Gas profits have soared by 98%.

There should be government intervention to link customer gas and electricity prices with market prices, but unfortunately Conservative party politicians are in the back pockets of large companies such as Centrica and Npower as they seek positions on these companies board of directors after they leave political office, so may make noises in parliament but will not follow through with any actual acts of parliament to limit price hikes.

I could recommend changing to another provider but it would be a case of choosing between which is the least crooked monopoly supplier of gas to beleaguered UK retail customers that are getting ripped off by at least 50% on the current price never mind the higher prices around the corner. Gas and electricity customers should contemplate switching to alternative sources of energy such as solar panels.

The only way small retail customers can get anything back is by being invested in monopoly profit generating companies such as Centrica (owns British Gas).

Comments and Source: http://www.marketoracle.co.uk/Article24232.html

By Nadeem Walayat

http://www.marketoracle.co.uk

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Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market and he is the author of the NEW Inflation Mega-Trend ebook that can be downloaded for Free. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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