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Does The Energy Minister Actually Understand The Energy Market?

In Ed Davey’s interview on the Sunday Politics yesterday, UK Energy Secretary Ed Davey said that high energy prices in the UK were driven by world gas prices. However, this is not actually true. As was pointed out to me some time ago, there is not actually a global market for natural gas, it being rather difficult to transport.

The following graph (source) demonstrates the point.

The difference between the low gas prices in the US and the higher prices in Europe seems to be due to the US having exploited its shale reserves while in Europe we haven’t.

I think Mr Davey wants to keep it that way.