The market for retail gas supplies is mired in controversy and threats of direct government intervention to freeze prices should a new Labour government be elected in 2015. This week we have seen a classic example of the type of price leadership we expect to see in an oligopoly.
Hot on the heels of a steep rise in prices from SSE a few days earlier (SSE announced an 8.2% increase in domestic bills from 15 November) British Gas has announced that their own energy prices will jump by an average of 9.2% from November 2013. The average annual dual-fuel bill with British Gas will increase by £107 to £1,297.
Centrica argued that the climbing price is mainly due to higher costs for wholesale energy and delivering gas and electricity to homes, and the impact of the Coalition government's "social and (green) environmental programmes" which are paid for through customers' bills.
But now that two of the leading six suppliers have taken the decision to lift energy bills for household, commercial and industrial users, it can only be a matter of time before EDF, E.ON, npower and Scottish Power follow suit - this is a process known as price leadership and will be well understood by students of the oligopoly market structure.
One of the consequences of the frequent gas and electricity price hikes has been a substantial fiscal dividend for the UK treasury as this news article in the Telegraph makes clear.
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Dates and Locations
AS & A2 Economics - Macroeconomics: National & International Economy (Unit 2), Global/International Economy (Unit 4)
- Tuesday 25 March 2014 - London (Stratford City)
- Wednesday 26 March 2014 - London (Fulham Broadway)
- Thursday 27 March 2014 - Bristol (Cribbs Causeway)
- Friday 28 March 2014 - Birmingham (Star City)
- Tuesday 1 April 2014 - Gateshead (Metro Centre)
- Wednesday 2 April 2014 - Leeds (The Light)
- Thursday 3 April 2014 - Manchester (Salford Quays)
Post-Easter (AS Economics Units 1&2 Combined; Global/International Economy (Unit 4))
- Monday 28 April 2014 - London (Stratford City)
- Tuesday 29 April 2014 - London (Fulham Broadway)
- Wednesday 30 April 2014 - Bristol (Cribbs Causeway)
- Thursday 1 May 2014 - Birmingham (Star City)
- Friday 2 May 2014 - Manchester (Salford Quays)
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