Privatisation and the price of gas

As David Lawrence of Liquigas has kindly offered an alternative view to the one put into print by myself on July 18 regarding gas prices, I feel that a few words more may be in order.

My sole point raised in my previous letter was that I felt using the UK as a comparison was incorrect. Mr Lawrence disagrees that the majority of gas used in the UK is natural gas and quotes sales of bottled gas being in the region of 147,000 metric tons. Now I am very wary of statistics quoted out of context. The figure sounds very impressive on its own, as it was meant to be, but what percentage of total gas sales in the UK does this reflect? Not a lot, I would guess, not being able to quote statistics you see. This is not an impression but the experience of living in the UK all my considerable life.

By the size of cylinders quoted I would imagine a lot of these cylinders were for commercial use, not domestic. My point was that the UK is not dependent on bottled gas alone, as is Malta, and so price comparison is a bit of a red herring.

As to the subject of shareholders, Mr Lawrence is quite right to say it is normal to provide shareholders with an adequate return on their investment but it is this very fact that is part of the problem with any privatisation. With any government in charge, the shareholder (customer) gets their dividend in the form of a subsidy to customers, whereas the private company issues its dividend to a relative few, who may or may not be customers. I am not anti-shareholders, I own some shares myself, but one must accept that part of any price rise is not just through market forces but a percentage is for the shareholders.

As to Mr Lawrence’s comment about my unusual argument, may I just add this. In the UK, petrol suppliers sell their product in different parts of the country at different prices according to the perceived ability of the motorist to pay. Relatively lower wage areas pay less at the pump. Fact, not impression: customer ability to pay at work. Not such an unusual argument after all it seems.

Finally, Mr Lawrence is again correct that the government is doing what many others have done previously by privatising the gas industry. That others have gone down this route does not mean it is necessarily good for the customer. In all cases, privatisation has led to vast increases in retail prices in the UK but not necessarily with an increase in quality of service.

Let us hope this price rise is not just the first.