Neil,
This is my understanding of the background - happy to be corrected if this isn't quite right.
It isn't necessarily too good to be true. If you enter into a deal like that there are likely to clauses preventing early departure. With lots of those sorts of contracts Scottish Gas can then enter into long term contracts to buy gas and offset future price fluctuations.
What Scottish Gas will probably do is manage the price on the futures market and/or enter into term supply contracts against committed customer supplies.
Prices can go up and they can go down. For us up seems rather likely.
However consider the scenario where the USA economy goes into melt down and causes a World Wide recession. In such circumstances there will be a global cut back in energy demand - in particular oil. Oil prices would come down - however it may be several years before the economies come out of the doldrums. Currently gas prices are linked to oil prices - so they, too, would come down. At the end of such a recessionary period there would be a brief up in the economy with a sharp rise in energy costs. However as there is generally less oil and gas available - this is likely to be followed by another recession - only this time deeper.
Another point is that there are efforts to introduce further competition into the European gas market. If European gas were freely traded and decoupled from oil then prices would be lower than they are at present.
I doubt the above answers your question 'should I sign up' !
Regards
Mike
----- Original Message -----From: Neil GallTo: Entropy-UK@...Sent: Thursday, September 15, 2005 5:31 PMSubject: [Entropy-UK] Fixed fuel prices until 2010?Hi everyone. I assume this list is still active, if very quiet.
The other day I received the well-publicised offer from Scottish Gas
to fix my domestic fuel prices until 2010. Given what we all know
about supply, this seems like an offer too good to be true. I'm
naturally sceptical of any offer a business makes as I know from my
own work that it's carefully thought through to maximise long-term
benefit to the business, not the customer. Surely Scottish Gas are in
the know, or is this the sort of risk it takes to keep your customers
these days?
In short, should I sign up?
Cheers,
Neil
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