Oil companies want to become power utilities to meet rising demand from electricity in transport and from growing populations. The strategy makes sense, but would also bring risks for regulators and consumers if it were to create a new breed of gigantic energy-controlling monopolies. On one hand, watchdogs in developed markets such as the UK should welcome the introduction of relatively new players like Shell and BP to challenge the Big Six conventional utilities. On the other, electricity markets are politically sensitive and oil majors would make easy targets for politicians keen to be seen protecting consumers if profits are put too far ahead of the public good. The Labour Party has threatened to nationalize parts of the electricity industry if it gains power in Britain. Meanwhile, regulator Ofgem was forced last year to introduce price caps to reduce household energy costs in response to political pressure. Introducing big oil into the debate could fan the flames. There is also the question of shareholder value for oil industry leaders to consider. Can Shell and other international oil majors afford to increase spending in their embryonic electricity businesses and still maintain adequate levels of expenditure on their conventional oil and gas… continue reading
Continue reading Big oil’s electric dreams could create new energy cartels. This article appeared first on CTRM Center.
Source: CTRM Center