The Current Uk Energy Market Supply

1788 Words8 Pages
Introduction Energy as gas or electricity constitutes a huge part of the current market supply, which have a strong impact not just in the environment but also in the economy as a whole. According to Allen, Hammond and McManus (2007) as energy worldwide demand is growing, the scarcity for resources grows too, which is threatening not only energy security but also energy costs. OFGEM´s (2014) report´s, analyses the gaps and adquisitions of the energy market supply in Great Britain, where they found that the energy service supplied is dominated by six main firms, which have been facing strong problems with consumers decreased trust, higher costs, wider barriers to entry, evidence of a possible tactic coordination and lack and weak…show more content…
According to Office of National Statistics (Gov.2014), the variance of inflation during these years reached approximately 9%, which means that gas prices increased approximately three times versus inflation, and electricity prices 1.7 times as well in these same period. Considering that gas and electricity use are priority, consumers are being affected in their family budget and disposable income, by this price increase. High prices on the marketplace are due to the fact that very few firms are capable of controlling them. According to ONS in Figure #2 (appendix), extracting from the industry market concentration measurement versus the number of control firms, we can conclude that in years 2005-2009 there was not a significant change, instead in years 2010-2013 the indicator evidences a high energy concentration in the market, which matches the high price increase in energy of approximately 40%. The higher the value of the index ( energy concentration), we will find fewer control firms in the industry, thus creating a high intense concentration, which means that as the number of control firms disappear, power will start to concentrate in the remaining firms that have high interests in obtaining profits and position prices above inflation. Figure #4 (appendix) shows that high profits of these firms come from the domestic supply between
Get Access