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There isn't an institution or a single decision
Think of it like a farmer selling wheat of 100kg in total. It comes again next year in a varying amount and the cost of machinery changes as do the wages of the people harvesting it, so the cost of bringing the wheat to the market is variable.
There's 10 farmers wanting to buy 15 KG each. So the price changes based on this, one farmer gets in early and buys 20KG and then the rest realise they are short so they up their bids per KG. In the end, the cost of the wheat goes up because there is a limited supply and lots of demand. The higher they buy it for, the more it costs to turn the wheat into bread because they need to make a profit irrespective of how much they buy it for.
There is no overall body deciding the cost of gas or energy. But if there's a finite amount of it and you say "I'll pay X for it!" then I can come along and say "screw him, I'll pay 1.1x X for it" and then either someone else bids higher or I get it and you dont.
Sorry if that was patronising, didn't mean to.
Where are these decisions taken is this the stock market? What institutions are responsible for deciding the energy price variations?
There seems to be a great deal of coverage in the media about the the energy bills rising but absolutely none of the mechanics to how this is happening and where these prices are decided
Rather than by the time it gets to the end user, then the price is set by what people are willing or able to pay.
If there are 10 barrels and 15 people who all need a barrel each, then the price will be set by the 10 people who are able to pay the most.
If there are 15 barrels and only 10 people then that dynamic is reversed.
Now there are bound to be people who are taking advantage of the situation, but we are here because capacity is stifled and is unable to meet demand. Though that demand might be tailing off as people make decisions not to spend and demand is destroyed.
But that’s not going to save the winter. It’ll not really subside til it gets warmer in the new year id imagine.
And isn’t the UK paying far higher energy prices than the rest of Europe
At the moment there have been significant supply shocks due to things like Ukraine which have significantly impacted the capacity for supply. And when these things get turned off they take a long time to turn on again.
Energy prices have come down, but they take a while to feed through to the real economy. And even then, prices will only drop if demand falls and people stop buying.
And we ie the UK have no influence on this for example what would either drive up or lower the price and who decides this?
The wholesale price is the same, if not lower than a year ago.
The weak pound and greedy shareholders are what is driving up profits.
Obviously the Tories are loving this, no matter how much they claim the opposite.
But I meant the price that BG would pay to receive the Energy I just see so much attention paid to these going up in the media but not who is doing this and driving the price up??
Cos they couldn’t afford to keep paying me. I ended up being a victim of ‘fire and rehire’, something that is illegal in most countries and is frowned upon even here.
They’ve just announced record profits of over a billion and started paying dividends to shareholders.
Does anyone know who is setting the prices that the energy companies pay to distribute the electricity and gas to there customers. Yes I get the coming out of Covid-19 and Ukraine war pressures. And I understand the basics of supply and demand but who is setting the wholesale prices is this the speculators in the finance market driving it up?