Bishop Hill Shut your eyes, Mr Davey
Jun 6, 2014 Climate: Parliament Energy: gas The central premise of government energy policy is that fossil fuel prices are going to continue to rise. All the claimed benefits of renewables are calculated against a such a rising baseline for a fossil-fuelled future.
It's therefore interesting to see that UK natural gas prices are now falling and have reached a six-month low:
The largest deliveries of liquefied natural gas cargoes to the U.K. in a year are sending prices for the day-ahead fuel in Europe’s biggest market to a sixth monthly decline, the longest losing streak since at least 2007.
The day-ahead contract on the National Balancing Point gas hub dropped to the lowest since October 2011, heading for an 8.2 percent drop this month, broker data compiled by Bloomberg showed. Ten cargoes from Qatar arrived at the U.K.’s South Hook terminal this month, the most in a year, according to port authorities and ship-tracking data on Bloomberg.
I think Ed Davey will need to turn a Nelsonian eye to this one.
Reader Comments (11)
Or blame it on the weather...
Gas Benchmark
Mild weather also is weighing on natural gas prices. U.K. gas for delivery next month, a regional benchmark, declined to the lowest price since August 2010 yesterday, according to broker data. Societe Generale SA yesterday reduced its price forecast for U.K. gas in the July-to-September period by 11 percent in a report.
First of all, Ed Davey must look up the meaning of the adjectives 'pragmatic' and 'dogmatic'.
Alternatively we must change the spelling of the latter to 'daveymatic'.
Did I miss the BBC Environment report by Harrabin, McGrath et al, that a benefit of Global Warming for UK residents was that we wouldn't need to buy so much heating?
In our area on the east coast of the US, the local gas and electric company buys and stores a lot of gas in the summer when it's cheaper and then can hold priced down in the heating system. I've heard that the UK has very little storage capacity, only a few weeks, so can it really take advantage of these lower nat gas prices to prep for a cold winter?
One UK aspect that is affecting prices is that the UK-Belgium Interconnector pipeline is closing in 5 days time for a fortnight's maintenance. We have recently been selling about 30 million cu m/day to the Continent via that route.
In the mid 1980s when coal (and cars) were first heralded by most of the media as the scourge of the future, we were encouraged to turn to gas - much, much cleaner.
But lo and behold, the world's gas reserves were being rapidly depleted and the world would run out of gas by 1995!!!! Remember all that - it's in the newspaper archives in case you think I am skiting. Isn't it great that cars and trucks no longer emit oxides of carbon - it would really hurt vote potential if you had to "turn off" cars just as you turn off coal and nuclear power stations.
That successful chess player (Putin) has not yet played the knave up his sleeve - turning off the Russian gas supply to eastern Europe.
Won't the Commander in Chief really have something to grizzle about when that happens.
Living in Ontario I use a lot of gas to heat my home in a year.
The arrival of beautiful Marcellus shale gas through my delivery pipe has seen my gas bill more than halve over the last few years, while my consumption has gone up (due - ahem - to colder than usual winters).
Meanwhile, the geniuses running our energy policy have been providing such massive subsidies to wind and solar development that my electricity bill has doubled in the same timeframe - and is set to double again (by their own numbers).
The Ontarion Green Energy Act means that the owners of the gas turbines needed as backup for the (80c kWh feed in tariff) solar supply and wind farms are paid for 100% production, regardless of their actual output, as otherwise they would shut down and move out of the province with the rest of our manufacturing sector.
In Ontario we now have a case where:
- Industry has fled the province due to high energy prices - electricity demand has therefore dropped
- We now over-produce and have to pay (yes pay - often millions of dollars a day) New York and Quebec to take our excess power to keep the grid balanced because... ...
- Guaranteed contracts require us to pay wind and solar farms for whatever they produce at guaranteed rates (for 20 years!) whether we need to power or not
- Gas plants are paid as if they are running at 100% so the ever needed backup does not flee the province
Madness.
Consumer prices will continue to rise, taxation will see to that. The strike price for the new nuclear plants was high (and index linked) too which will help maintain an upward trajectory on prices.
Some months ago politicians were talking up the idea of freezing prices. Inevitably, that led to a big upsurge in forward hedge purchases by the Big 6 (and lots of offers of fixed price deals to consumers too). Market liquidity constraints in the more distant forward market meant that hedge purchases were concentrated closer to the present, with the intention of rolling positions out. That has helped bring forward the surplus physical supply, with banks and traders poised to profit from the consequent fall in prices having allowed themselves to be bid up to provide the forward hedges in the first place. Whichever way the Big 6 play it, they have lost out (and consumers too, because OFGEM allow poor forward hedging strategies as cost of supply). I have to say I forecast exactly this outcome when Miliband started spouting. Our domestic prices are now higher than they need have been.
Joe Public:
The DECC and BBC like to tell us that it is better energy efficiency that will lead to us purchasing less energy, and not the excruciating rise in prices that forces people to economise and even freeze to death. In fact, they assume this is the case in order to try to distract our attention from the rising prices per kWh, and only ever discuss the "average bill".
Presumably he's also been looking the other way when confronted with stationary wind turbines over the last few weeks...
'Yes - but YESTERDAY was quite windy..!'
Sigh....