Conn wades into deep waters

As the owner of British Gas, with some 16m customer accounts, Centrica will always command a great deal of attention. This is particularly true in a period when the wholesale prices of gas have come down by 34pc and bills by 14pc after three successive cuts.

Explaining all of this has been a constant conundrum for Centrica. Current chief executive Iain Conn deserves some credit for tackling the issue head- on. sure market prices have come down but he argues some 60pc of gas bills are made up by pipeline, transportation and the green costs which the Government imposes on the big six energy firms.

Nevertheless, it is not hard to understand the anguish of the consumer as they constantly read of record low energy prices and have to wait a huge amount of time to see lower prices passed through.

Under its freshened leadership Centrica is busy reshaping. It is particularly keen to remove itself from the exploration and production business and to concentrate on con- sumers in Britain, the Us and Ireland. But it is by no means the best time to sell production assets as it is stuck with some big capital writedowns in the North sea and elsewhere. It also is finding it hard to extract itself and its Qatari partners from its Alberta onshore well and shale operations.

The difficulty is instructive because it suggests that shell, which has promised big asset sales to help pay for BG Group, may not find it that easy especially in this year’s turbulent financial markets.

Centrica’s ‘Tell sid’ investors, of which there are still 600,000 or so, will also be keeping a weather eye on the dividend. The reduction was unveiled in February 2015, so there will be some relief that there are not further cuts to come. For those looking for a cheerful message, at a time when the energy sector is under so much pressure, Centrica believes it can operate fairly profitably with oil prices at $35-a-barrel. That is more than can be said for BP and shell which need a much higher price.

On the political front Conn is out there batting for lower North sea oil taxes which makes a great deal of sense if the area is not to be denuded of platforms and expertise that will be needed when production can be geared up again.

Conn is much less convincing on Europe. He argues that we need to be inside the tent to fight for more liberalised utility markets, competition and lower prices for the British consumer. Up a point, Lord Copper. The reality is that Germany, France and the rest show no signs of freeing up utility markets, whether Britain is inside or outside Europe.

When there is a crisis, as for instance when Russia cut off supplies via Ukraine pipelines in 2009 and has threatened to do again recently, it is every nation state for itself. The UK finds itself at the end of a pipeline and horribly disadvantaged.

The chances of Britain breaking down the barriers to energy nationalism from inside the EU are frankly a fantasy.

Keynes reborn

JUST how hard it is to get anything accomplished in the EU comes through loud and clear from the OECD’s February economic outlook which has an air of despair about it with its call for an ‘urgent policy response’ to the current slowdown in world trade, global output and the stagnation in the euroland.

It notes that while some economies such as Britain undertook reforms following the financial crisis and have recovered, growth in the core euro economies remains slow.

The efforts by the European Central Bank to kick- start output by printing money and with negative interest rates is being hampered, the OECD says, by high levels of private sector borrowing and by banking systems weighed down with rotten loans.

It wants to see what it calls ‘structural’ reforms. These would include de-regulation of labour and energy markets – in other words, outstanding issues that most of the EU (with the possible exception of Germany) has failed to address. The OECD backs some old-fashioned Keynesian investment in infrastructure and the like and thinks the European Investment Bank could play a bigger role and be less risk averse in its financing.

But these are boulders that Brussels finds very hard to push uphill.

Grocery shoot-out

NOT so long ago Asda, owned by America’s gun-toting Wal-Mart, was everyone’s retail ideal. Its leaders Archie Norman and Allan Leighton waltzed into the most prestige boardroom and political jobs and Tesco and sainsbury’s rushed to catch up with superstores of their own.

How the world has turned. Food retail is now all about millennials, metro living and online and the German incomers have focused on fewer low price but high quality lines. Asda is left in the slipstream playing catch-up as its rivals have stabilised their models.

Could the owners in far- off Bentonville, Arkansas lose patience?