gas @ electric work for profit we are asked to use less up goes price what do you think?

Answer 1

Many electric utilities use gas to produce electricity. Many homeowners use gas to heat their homes.

Both are commodities that are regulated by state agencies (usually a public service commission). Both need to maintain a profit - if they go bankrupt, they will not send power to the end user.

If everybody in the country were to turn their heat/power off at the same time and leave it off for a week, the price of both would drop overnight because there would be plenty of supply. Natural gas prices are based on supply/demand market conditions. As supply increases and demand decreases, the prices drop. If demand increases and supply stays the same or is less, the price will go up.

As electric companies use natural gas, their rates fluctuate accordingly.

Answer 2

It isn't just a case of supply and demand, because a company which has such a massive investment in plant, machinery and distribution, also has to maintain it, pay wages, renew equipment as it wears out and lay new pipelines or cables to new housing or industrial developments.

So at the base-line, there is a huge fixed-cost, and to get some sort of return on the ivestment, gas and electric companies need to maintain current levels of consumption.

If consumption falls dramatically, then this hits profitability, whatever happens to the initial cost of gas, coal or nuclear fuels, becaue fluctuations in the market-price for such things is always passed on to the consumer under the auspices of a regulatory body.

With gas supplies dwindling, and Russia/Norway now the dominant sources of natural gas, there is a move towards nuclear power once again, which France has had in abundance for many years.

Nuclear plants are extremely expensive to build and maintain, whilst the re-processing and disposal of waste add enormous cost to the industry.

So, I'm afraid it's far too complex to give a simple answer, because there are so many fixed-costs and so many variables, with new technology coming on-line on a regular basis.

Due to the privatisation of the energy industry, we are all mercy to market forces, fixed costs and the drive towards profitability.

Answer 3

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