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Are gas price falls here to stay?
Added: (Wed Dec 24 2008)
Over the past 5 weeks we have seen a dramatic reduction in the price of oil. Thankfully the pump prices on our garage forecourts are falling back to levels not seen since early 2008 and gas prices are falling too. But does this mean we can all breathe a sigh of relief and assume that these 'low' prices will remain?
I believe there are two issues at stake here - the first is one of supply and the second is that of responsibility.
1. Supply.
There's no doubt that our oil and gas reserves are running out. Estimates tell us that we have less than 40 years of discovered oil left on this earth whilst gas reserves are fast diminishing too. Even if these estimations are inaccurate, it's certainly becoming more and more difficult to find and excavate fossil fuel reserves - and this will have a long-term upward effect on the price of these fuels. Britain has historically extracted its own gas from the North Sea fields but as these reserves run out we will be forced to import from other places. Just today the BBC reported that Russia, one of the world's main gas suppliers, is indicating the age of cheap gas is over. In essence, Britain's gas and oil prices will likely rise over the long term.
2. Responsibility
Whether you agree with or refute the evidence that global warming is happening at a rate faster than predictions can keep up with, given the diminishing supply of oil and gas and the irrefutable evidence that both are major pollutants of the environment, it stands to (strong) reason that cleaner energy generation will benefit us all (and our children's children). We all have a responsibility towards helping clean up our world through the application of clean, renewable energy solutions. Furthermore, each of us should do their bit. But, the issue won't hit home until the positive effects on our pockets become palpable and this will only happen once the Government incentivise us to employ alternative energies. The carbon emissions targets are stringent and Britain is taking this seriously.
Increasingly over the next few years you will see a carrot and stick approach whereby renewable energy users will be rewarded and fossil fuel users penalised. This will happen through taxation and financial kick-back schemes and through funding incentives whilst fossil fuel users will see higher taxation and supply costs.
Read it here - over the long term gas prices will increase. In the short term they will continue to be volatile. Electricity prices on the other hand will continue to remain relatively stable and as nuclear generation comes on stream prices will fall. However, a very real option when it comes to electricity is to generate your own, thereby insulating you or your community from both gas and electricity price fluctuations. Already, cash-back schemes for self-generation are available and these will only improve.