Thursday, 24 March 2011

Understanding The Inconstancy Of UK Gas Prices

Remembering when the UK was self sufficient for natural gas few factors changed gas prices. They were weather and demand, nowadays, the United Kingdom gas market has become more complex and various factors have a head-on effect on prices.

With the fall of North Sea gas production the United Kingdom went from being self sufficient and an exporter of natural gas to being a net importer. This has caused numerous changes to the UK gas market, for the most part in business and commercial gas prices volatility.

Since 1998 when the first pipeline between the United Kingdom and Europe was opened UK gas prices were automatically hooked to European oil indexed prices. Since then, United Kingdom gas prices were determined by marginal transactions. Basically if oil prices augment so does UK gas prices.

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