Wednesday, December 5, 2007

Cutting rates tomorrow is CRIMINAL

‘Ominous warning sign’ as British Gas raises tariffs

British households suffered a fresh blow to their strained finances yesterday as British Gas said that it was lifting the price of a key energy tariff by up to 15 per cent, prompting fears of a wider increase in gas and electricity bills in the new year. Britain’s largest energy supplier said that it was putting prices up on its Market Tracker price plan, which follows prices in the wholesale energy market, by 13 per cent for gas and 15 per cent for electricity, with immediate effect.

Posted by confused76 @ 10:19 AM (1339 views)
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17 thoughts on “Cutting rates tomorrow is CRIMINAL

  • “The announcement was made on the eve of a pivotal meeting of the Bank of England’s Monetary Policy Committee”

    what a coincidence…

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  • speculatorone says:

    Between utilities, council tax and groceries no one will be able to afford a mortgage soon. When you add the cost of these items to what they were only a couple of years ago it is quite frightening. I still cannot believe the housing market has not crashed before now. Each day we keep getting all these doom articles about the housing market but still it holds in there.

    When will it ever happen?

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  • BTLetters are the dumbest individuals on the planet
    nothing surprises me about them

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  • “Cost of Living” It’s an old saying I remember well from growing up in the 70’s. We’ll be hearing it a lot more now.

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  • I see an ‘adjustment’ of the energy weighting in th CPI coming…..probably due to a ‘mild autumn’ or such rot.

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  • tyrellcorporation says:

    LOL, they adjusted the weighting upwards at the beginning of the year to ‘reflect the growing importance of utility prices on the family budget’ (this was when prices peaked). I wonder if they’ll suddenly deem it necessary to reduce this weighting as prices start to rise again. They’ll find it tricky to now announce that utility bills are actually not that important anymore.

    Watch this space as they say.

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  • speculator1, handle_it:
    You’re both right, the cost of living is rising! The governments of the UK and USA have been pulling the wool over our eyes on this matter, pointing to rising GDP as evidence that all is fine. What has really happened is that at some point in the past the amount of disposable income peaked, and it has been falling ever since. We are spending more than ever on fixed costs such as housing, utility bills, food, transport, and of course tax. Just as much of our housing cost is actually paying the mortgage interest (or our landord’s mortgage interest), much of the tax we pay is actually paying interest on government debt. There are a couple of good articles on the subject:
    http://www.msnbc.msn.com/id/21309318/
    http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/10/08/ntax108.xml

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  • Total UK energy consumption peaked in 2005 and has dropped by about 4% since then. We are now consuming energy at levels not seen 1998. To me this reveals the lies surrounding the success of the British economy, since “Real” GDP growth is not possible without increasing energy consumption. GDP growth with falling energy consumption is a sure sign of impending high inflation, just as it was in the 1970’s and 1980’s.

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  • stillthinking says:

    The cost of living isn’t rising. The amount of money we have to spend on living is decreasing. Same effect but different.

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  • rickyb,
    I don’t agree that rising energy consumption = GDP growth all the time. At the risk of sounding like Gordon Brown, we have shifted from an industrial economy with high energy consumption (melting steel, running factories, etc), to a service economy with lower energy consumption. On average it is true that rich countries use more energy than poor ones, but it’s not a 100% correlation. For example a country with a mild climate and minimal heating or air-con costs will use less energy than an extreme climate country. For more info see: http://en.wikipedia.org/wiki/Energy_intensity

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  • rickyb, sorry but I’d have to agree with Drewster. I cannot see little logic that would support a direct relation of GDP to energy consumption even at the best of times for such an argument. The fact that we are indeed moving to a “service based” economy (and I share the displeasure of Drewster in using such a NuLab term) and that technological advances are focusing on reducing energy inefficiencies because of the current Eco biased trendiness factor further weaken your argument.
    As an aside I would give NuLab some credit for transitioning us from a somewhat aimless economy (after the collapse of manufactoring) to this new “service based” idea, it’s a bit woolly but it does seem to be working to some extent. Unfortunately it does rather hinge on us being able to make a claim of being a highly educated and technologically advanced nation which seems to be on the slide from some of the press I’ve read lately, that and the whole tuition fees thing (sore spot, I was the first year that had to pay ;^}).

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  • drewster,
    If GDP is the money value of all goods and services produced by a nation, then it can be reasoned that the total energy consumption of a nation is the sum of all work required to produce those goods and services. Thus if energy consumption drops, then I would argue that any GDP growth is inflationary. Clearly climatic conditions affect a nations energy requirements, but I would still argue that energy consumption is the most important measure of a nations economic prosperity. Any reduction in energy consumption will lead to a reduction in average living standards, regardless of whether these reductions are the result of increased efficiency.

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  • Drewster/Ricky, we have swapped factories for houses and offices stuffed full of computing gear, air conditioning and excess lighting. Falling energy consumption in the late 1970’s early 1980’s did coincide with the demise of heavy industry which was why maggie managed to kill off the mining industry. I would also agree that any fall in electrical demand in the UK now, bearing in mind our rising population also indicates a fall in economic activity and wealth. At least there will be some spare capacity to charge our electric bicycles we will end up riding around on when NeuLiebor has finished stuffing up the UK!

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  • enuii,
    A fall in electrical demand could be caused lots of things, not necessarily economic conditions. For example:
    – Mild summer weather (like this year) reducing demand for air-con
    – Local councils switching off alternate street lights overnight to save money
    – Households buying energy-saving lightbulbs
    – White goods (dishwashers, washing machines) becoming more efficient
    – Electronics (TVs, computers) becoming more efficient
    – Boilers: a new condensing boiler will save 30% over the old-style boilers
    – Compact-flourescent “energy-saving” light bulbs save 80% of the electricity
    – Government grants for loft insulation and cavity wall insulation
    – International schemes such as the Energy Star programme, the One Watt Initiative, and TCO Certification

    So while energy use is broadly correlated with GDP, it’s definitely not a 1:1 link. Some countries use lots of energy for relatively little GDP, others use little energy for lots of GDP.

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  • The reason why GDP grew as meteorically as it did is precisely the same reason why house prices shot up in the first place – the abundance of cheap debt. Now that this supply has all but dried up, we should see a decrease in GDP growth and houseprices, but fear that the consumer is going to be badly caught up in this because of their debt position. I read that the average person in the UK now owes £33,000 in unsecured debt. Even if a recession is avoided, which is possible because of continued growth in corporate profits, I can see housing going down a long, long way. They have already dropped nearly 3%.

    One reads that retail strength remains strong (both in the UK and US). I can’t say I am surprised about this either. Despite the debts consumers owe, there is still be tons of credit sloshing around on credit cards. Reality hasn’t hit home yet, though many of us are affected. When it does, it will be like running into a brick wall.

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  • “…Britain’s largest energy supplier said that it was putting prices up on its Market Tracker price plan…”

    Market Tracker…? Sounds too much like Margaret Thatcher for my liking…

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  • drewster,
    Unfortunately, few of the energy efficiency measures you mention make any difference to the nations overall energy consumption. A couple of examples. I replace my old gas boiler with a new one which also requires a large amount of energy to manufacture and transport. I replace my old light bulbs with energy saving bulbs, but the heat that the old bulbs produced contributed to heating my house, and now my boiler has to compensate by throwing out more heat, so no net energy saving. And even if I did make large savings in my energy consumption through increased efficiency, I would just have more money to spend on other items – all of which require energy to produce. I’ve made another posting on this subject but it seems to have been lost.

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