British Gas Profits Soar, Gas Prices Drop Yet Prices Don’t. People, People Why all the Shock?
Posted: Friday, February 26, 2010
by Connor Davidson
You've probably heard the news that Gas and electricity giant British Gas made a pretty penny last year. Perhaps, a pretty penny is an understatement: they made 600 billion of them or - in other words - 600 million pounds (about $915 million). Naturally, people are more than just grumpy about this that is not just because it's showing up their business takings. The thing that gets to most people is that millions of people in the UK are living below the fuel poverty line and can't afford to heat their house. This particularly affects old people who are living off a state pension, which is really not all that much. Just watch as poor old Mrs Shivers tries to blow out the pilot light (not advisable) in an effort to save a precious pretty penny. She is furious about their profits. Perhaps, when she finds that dynamo, she might phone them up to rant about it and, even more naturally, explain that things were different in her day.
Just hold on for one second, I know that it was socialist. Yes, socialism has its flaws: there is no competition, service declines and when things go wrong its not the guy with the Ferrari that gets it. Though, despite all of socialism's flaws I ask you: have you ever tried complaining to British Gas in the hope of something other than paper work happening?
The thing that I don't understand is what people are shocked at. It's like watching a football flying straight towards your head and then saying: "oh gosh where did that come from?" after being hit in the face by it. British Gas is a profit making machine. If it did not make money then the investor would have a tantrum and stop investing, the company would be a crap company and subsequently be consumed by another company that the investors are now canoodling with. That's capitalism. People who want to become billionaires don't do so with a global chain of charity shops.
I, and coutless others, don't like these profits, under the current circumstances, and wish there was a way to have everything work the way we want it to. Alas, we're just going to have to put up with British Gas making these incomprehensible profits. Its not fair that people live in perishing cold houses needlessly. Something needs to be done and fast to help these people. Ranting about the private sectors profits will not solve anything. Our entire economic system is fuelled by making big profit.
If it angers you so much perhaps you could find a new gas supplier. You may well be able to save money (which is good) but you'll just be lining someone else's pockets at slightly less expense to yourself. But for now all you can do is wait with your fingers crossed for British Gas (and others) to pass on the wholesale gas price drop.
Yes, capitalism does have its flaws(as fuel poverty so elegantly shows) but it's nowhere near bad enough that I would even consider the 'competition'.
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More commentsGreat article, Conner. To me profit isn't a dirty word. People often forget that when a company produces a profit, it passes that onto it's shareholders, who then either spend it or reinvest it...both of which will "trickle down" (to use a rather hacknied phrase) to others in the broader economy.Good point.Thanks for the comment.
Obviously profit is the goal of all business, but the necessities (Heat and electric) should not be in the category of big business.A person has a right to choose whether or not to purchase a car, rug, tools, jewelry, and other items that are not considered an necessity at someone's profit, but heat should be obtained fairly at no profit for all.I believe this is another ploy by the elite to control the masses. Everyday people don't dream of becoming rich and living the good life anymore. Instead our collective "dream" is just to hang on and survive.I see what you are saying. I think the companies would have been better government owned or at least as majority shareholder.Thanks for the comment.
Trickle down usually means trickled on.Some things aren't meant to be profited on, for good reason. Such as city services, and national defense to name a few. As profits tend to serve a few as opposed to serving the overall good of it's citizens. As the American health care system illuminates this, in that a very small % of the population shares in the 2.5% of an almost 1 trillion dollar annual profit margin, and all at the expense of only letting 35,000 people annually die from lack of medical attention. So what exactly is it that makes this so much different than the diamond trade, which the world seems to be so up in arms against? And that's just the deaths, the numbers adversely affected are much higher.Capitalism without restrictions to help maintain discipline over greed, leaves a majority of it's citizenry underfunded, and therefore unheard.I see what you are saying. Certain things are certainly better in the public sector like the above. However, in the case of gas we've sold it off so we've got to move on.Thanks for the comment.
Nicely done. I wonder if it is in England as it is here: in America, the gas companies can raise or lower their prices (within limit) at will, in spite of government regulation. That is why these companies make such profits, which - when you look at the numbers - isn't that much (lots of money, but not much percent profit).The companies can in theory put up or down prices. If they lower there prices we'll see no problem. However, if they put there prices up too far we will be able to exploit a competitive market and change to a company that is steeling all the trade by keeping prices down.Thanks for the comment.
5-Year Averages Glaxo Smith Kline Pharmaceuticals
Return on Equity
60.4%
Return on Assets
17.0%
Return on Invested Capital
32.5%
Gross Profit Margin
81.7%
Pre-Tax Profit Margin
31.3%
Post-Tax Profit Margin
21.8%
Net Profit Margin (Total Operations)
21.4%
Latest Full Context Quarter Ending Date
2009/09 Gross Profit Margin
79.6%
Interesting information.Thanks for the comment.
There is something to supply and demand. There is also reasonableness. You'd think that when their costs went down they could be a bit more gracious to to the consumer. Thanks Connor.I'm sure they could I just don't think they particularly want to.Thanks for the comment.
Nicely done. There is evil in any establshment. Still, If I don't like Exxon, I can go to another supplier and Exxon can't dip their hands into my pocket book as deeply as they like as- the government does.Thanks for the comment.
Well-written article Connor! Thank you for the information, they are very helpful!Bests,TerenceThanks for the comment.
Not surprised at this. Received my boiler insurance today and they have raised it by 36%. How can they justify that?They want more money.Thanks for the comment.
In some states the utility companies are not allowed to shut off the utilities in an effort to keep people from dying especially the elderly when they cannot afford to pay their bills. I think the states could mandate some kind of legislation over the utility companies regarding this kind of problem. Great article Connor.The government usually steps in to prevent the power being cut to elderly people. They do this by giving the companies more money.Thanks for the comment.
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