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Dept of Trade and Industry

Answer

Mr. Hancock: To ask the Secretary of State for Trade and Industry what assessment she has made of the impact on UK manufacturing competitiveness of increased fuel prices. [201646] Jacqui Smith: The Department is monitoring closely developments in the UK gas market and the recent increase in the wholesale price of gas. Ofgem has now announced its conclusions on its investigation into gas price increases in 2003 and 2004. It has concluded that the main causes of rising UK gas prices are high oil prices feeding into gas prices and declining UK gas supplies. Ofgem is taking two courses of action. It is asking the European Commission to put more resources into making gas competition work, and is continuing to examine why some UK gas supplies did not reach the market. While the cost of gas to industry has been rising recently, this should be seen in the context of historical trends. In real terms gas prices for industrial users in 2003 were nearly 30 per cent. below their level in 1990 and well below their average over the last 30 years. Electricity prices have increased mainly as a result of the rise in gas prices and the recovery in wholesale prices from unsustainably low levels in 2002. Industrial electricity prices in 2003 were nearly 50 per cent. below their 1990 levels. Even after the latest increases we expect prices to remain competitive with those of our major EU competitors. The Department has recently published a report by Oxford Economic Research Associates which concluded that the UK has the most competitive energy markets in Europe. The report is available at: www.dti.gov.uk/energy/ gas and electricity/competitiveness structure/psa final. pdf

Secondary information

Type

Written question

Reference

201646; 428 c704-5W

Session

2004-05

Subjects

Energy Manufacturing industries Prices Trade competitiveness

Link

View this Written question on www.publications.parliament.uk