Chapter 9 - Gas as a Commodity. The UK Gas Market: From Nationalism to the Embrace of the Free Market

Abstract

This chapter examines the political, technical, and economic factors that have underpinned the transformation since 1986 of the British gas resource from one that was firmly controlled by the state to one that was determined largely in competitive markets. Despite the emergence of a competitive industry structure, British Gas and its daughter companies still continue to dominate much of the industry. In 1999, gas and electricity regulation were merged. The liberalization of the British electricity generation market and the lifting in 1989 of the European Union ban on burning gas in power stations created a new gas market. Three processes dominated the period from 1994–96. The first was the opening of the market for gas consumers using more than 2,500 therms per year, and the preparations for the introduction of competition for residential consumers. By 1990, when electricity was privatized, it was clear that the gas privatization structure was not appropriate if competition for final consumers was to be introduced. Gas Exploitation policies were driven by resource management considerations until privatization. The liberalization of the British gas market suffered from a lack of clarity in the objectives for privatization.