Gas Industry and the Impact on UK Economy Essay

Gas Industry and the Impact on UK Economy - Essay Example This is because numerous factors influence the supply and pricing of gas creating extraordinary inconveniences in the country’s economy. The changing prices of gas usually inflict a lot of pressure on the local economy through pushing up bills for electricity and straining the energy needs. For instance, the nuclear disaster of Japan in 2011 was a significant factor that drove the prices of gas severely affecting the UK economy. This was fueled by the increase of demand for gas by Japan that created sentiment of scarcity. This is just one of lots of aspects that play a function in the UK gas consumption and inherently impact the general economy. This report navigates around the global gas industry, its features and particularly its effects on the vast economy of the United Kingdom. In order to underscore the vast industry and its significance to the economy, the paper will determine the basic problems of the gas industry, market structure, inflation, supply with demand, along with economic enlargement and unemployment. The essence of the report is to expose the inherent implications of the activities and events in the gas industry on the UK economy. The gas industry has several problems most of which induce negative implications on the general economy. ... Supply and demand in the gas industry Supply and demand in the gas industry play an enormous role in affecting the process of gas in the United Kingdom, which directly increases the bills for electricity generated from gas power stations. Any slight change in demand or supply of gas, therefore, has a massive impact on the UK economy (Great Britain: Parliament: House of Lords: Select Committee on Regulators, 2007, 56). A clear example is the Japan nuclear tragedy, which led to the plants being taken offline. Therefore, Japan required more gas to meet its energy demands as an alternative to nuclear power. Gas dealers developed anxiety that the gas shipment destined for Europe could be directed to Japan; where there was high demand for natural gas and was being offered high prices. This trader sentiment created apprehensions that augmented the prices that energy corporations had to pay to purchase gas in the United Kingdom. This is the main reason behind high costs in bills in the count ry in the winter season. Similarly, the conflict in Libya has led to low supply of gas in European markets that imported gas from the North African state thus increasing the price of international gas. As a result, the cost of electricity generation rose pushing up electricity bills. In the United Kingdom, gas and bills are directly related because any changes in gas prices affects electricity bills of energy consumers who use electricity derived from power generators. Therefore, the varying cost of gas is a single dynamic that profoundly affects bills in the UK. For instance, high general price increase the rate of domestic heating as well as the charge of electricity. This has been contributed by the reality that the charge of electricity derived from gas power-stations