UK Gas Market

Question 1

By how much did the price of gas rise in 2021?

Answer 1

Over 400% increase in 2021

Question 2

What % of the UK’s energy came from fossil fuels in 2023?

Answer 2

60%

Question 3

What % of people owned electric cars in 2023 and 2024?

Answer 3

16.6% in 2023, 16.5% in 2024 – ownership fell slightly.

Question 4

What is the income elasticity (YED) of gas?

Answer 4

Around +0.8 – normal good, but inelastic.

Question 5

What is the cross elasticity (XED) of demand for gas vs. alternatives like EVs?

Answer 5

0.51–0.64 – weak substitutes.

Question 6

How much did the Energy Price Guarantee (EPG) cost in its first year?

Answer 6

Over £25 billion (from October 2022).

Question 7

What is the 3-firm concentration ratio in the UK gas market (2020)?

Answer 7

51.6% – British Gas, EON, and OVO.

Question 8

What is the 5-firm concentration ratio in the UK gas market (2020)?

Answer 8

67.8% – oligopoly.

Question 9

What’s British Gas’ market share?

Answer 9

26.9% - (stats from end of 2020) - working monopoly.

Question 10

What are the components of their costs by %?

Answer 10

Wholesale costs: 41.4%
Networking: 27.86%
Operating costs: 21.54%
VAT: 4.76%
Environmental/social: 2.46%

Question 11

How much smaller does gas become when liquefied into Liquefied natural gas (LNG)?

Answer 11

Shrinks by 600x in volume.

Question 12

What is the value of the grant under the Boiler Upgrade Scheme (BUS)?

Answer 12

Up to £7,500 per household/business.

Question 13

What price and profit regulation does Ofgem impose?

Answer 13

Price caps on unit energy prices.
Profit caps under RIIO framework (Revenue = Incentives + Innovation + Outputs).