26 | June | 2010 | Simon Townshend

Rip-Off Britain – Chapter 2

Published June 26, 2010 | By simon

I feel its time again to have another moan about my gas bills. If you were reading my articles a little over a year ago you will probably remember my last rant on this subject. At the time the wholesale price of Natural Gas had been in long term decline and was actually at its lowest price for 7 years, having FALLEN by over 75%. Yet mysteriously we, the consumers, were facing bills escalating wildly out of control over these same years. I wasn’t happy about it.

If you missed that article but these astounding facts interest you, here is the link: http://simon-townshend.com/2009/05/rip-off-britain

I heard on the news a few days ago that the gas prices we consumers have witnessed more recently are due to the weakness of the Pound. So the excuse seems to have evolved rather over the last year – maybe a few people with more influence than me started taking an interest in this market that so few people ever look at?

Needless to say when you compare the price of a Dollar (the currency in which Natural Gas trades) today to its price a year ago you notice something else that’s rather intriguing…A year ago a Pound bought you 1.5 Dollars. Today it buys you errr 1.5 Dollars! In the period in between the Pound has been STRONGER, not weaker, actually maintaining 1.6 to 1.7 for the majority of that time. So that was a pretty feeble excuse then. But maybe it served its purpose and diverted unwelcome attention away from the true wholesale gas price.

What will they think of next? Actually I have a sneaking suspicion that the next excuse will in fact revert back to the “terrible rises in the wholesale gas price”. The fact that these rises , if they do in fact happen, will come from an unbelievably low base will no doubt be overlooked as the con unfolds.

Why do I think this? Well over that last few weeks the Natural Gas market has actually bottomed and is now starting a very pretty well behaved new uptrend. How far it will rise is anyone’s guess but when you see just how far it fell over recent years, a very substantial rise is by no means out of the question:

The real question on my mind is if my own gas bills were able to rise during the biggest fall in real gas prices in recent history, what the heck will happen to them now? I fear we already know the answer to that!

On a slightly more positive note – my fund members and SIR subscribers have been long this market for the last few weeks and we plan to not only hold onto the existing position but to add to it at every opportunity if this new uptrend develops as it has the potential to. So “They” may have really shafted us on the way down, but at least we are somewhat hedged against the next round of shenanigans that no doubt will start to become newsworthy over the coming months.