Energy Prices (Strictly NO referrals!)

[danlightbulb]

Gas December22 futures hit another ATH today at 523p per therm or 17.81p kwh and are holding at 522 atm the moment

Is speculative trading part of the problem here? Are people buying futures in order to drive up the price and which they know then knocks onto consumer prices? This might not even be energy retailers doing this.

Should have suspended trading or make it spot price only i.e historical.

 

[bailes550]

UK Natural Gas Historical Prices - Barchart.com

Historical price quotes for UK Natural Gas futures, going back to circa 1980, with latest news and charts.

www.barchart.com

UK gas pricing from 1997 all the way to 2029 futures.

2023 looking painful

That looks painful! Just feels like year on year things get worse, there has to be a breaking point. There looks to be no stability in the near future with prices.

 

[Zenduri]

Is speculative trading part of the problem here? Are people buying futures in order to drive up the price and which they know then knocks onto consumer prices? This might not even be energy retailers doing this.

Should have suspended trading or make it spot price only i.e historical.

Nope, supply and demand, these are contracts being bought by power companies not individuals

 

[Puzzled]

Nope, supply and demand, these are contracts being bought by power companies not individuals

Needs regulation, paying more and more for life necessities will only lead to further global instability.

Costs for extraction may have gone up a bit but the record profits being posted this year shows the oil / gas giants are just taking the ****.

 

[Mercenary Keyboard Warrior]

Thanks for posting the link, really interesting read. Clearly there were several factors including deterioration however last year when they did the inspection they still kept it running until today. It is all about risk thresholds which I think are often excessive however I recognise nuclear is a safety critical sector. It seems to me like they could have done another inspection and based on the outcome of that, kept it running if they had wanted to.



Its just about challenging decisions which impact us. How do you know/trust that these decisions are always taken properly or other options aren't available? Experts are very good intelligent people but can often be blinded to other options.



Safety is important, but in this case the plant has been running and kept running since an inspection last year. At some point the plant needs to be shut down of course, but setting a specific date like they did is not done with any accuracy - its fairly arbitrary. In the case of a large item like this the safe operating life could easily be +/- decades as has been already demonstrated by the plant going 15 years longer than it was designed for. Does that mean they have taken too much risk or does it just mean that the design life is quite conservative and in practice its still ok. If a survey now revealed no change since the last survey, why not keep it going another year?



Risk assessors are conservative by nature unfortunately, in any field. In my experience it is not known risks that cause accidents, its the unknown ones that no-one ever considered.

I wonder what area you work in?
I work in manufacturing and almost all our global accidents are known things. Maybe its a business maturity thing.
We had a significant fire last year in one of our plants (burnt down to all intents and purposes)

Initial fault was caused by an employee not following material handling rules and trying to short cut. End result he spilt a drum of flammable liquid.
The risks are completely known in this regard and suitable equipment to make this safe is available.

To then compound his error and probably to try to cover up the fact he didn't do it safely in the first place he decided to ignore the spill protocol (use spill kit (if safe to do so) and call the spill team),
He decided to try to wet vac the spill up. However he went and got himself a non ATEX rated cleaner. The moment he turned it on it sparked and ignited the vapour.

We have only had 1 major incident since I have worked on this site, again known risk, human error, didnt check the equipment before he allowed a subcontractor to start transferring. resulted in a major spill of a serious chemical and resulted in half the counties fire brigade on site. (Top tier COMAH site)
All the rest of our incidents have also been known risks and I think all if not bar 1 or 2 down to human error or human refusal to follow best practice.

I would expect there arent many unknown risks in a nuclear facility. I posted elsewhere recently how unlike just about every other industry the nuclear one actually has increasing costs for repeat builds as they find more things to belt and braces than originally considered.

 

[jpaul]

Nope, supply and demand, these are contracts being bought by power companies not individuals

no he's right 50% more of the profits of bp/shell are from trading , so could be legitimately excluded from windfall tax / disgust.
eg. https://www.bloomberg.com/news/feat...-as-climate-change-worries-rise?sref=Xl91GI8N

and even these secret Cornwall associates cap estimations, how do they intergrate energy bought on the futures market,
so this stupid 'we estimate the point cost of a kw/hr in December will be X, so the CAP is Y" is misleading

edit: I'll spam the thread with an excerpt

And the wizardry pays off: In an average year, Shell makes as much as $4 billion in pretax profit from trading oil and gas; BP typically records from $2 billion to $3 billion annually; the French major Total not much less, according to people familiar with the three companies. In the case of BP, for instance, profits can equal roughly half of what the company’s upstream business of producing oil and gas makes in a normal year, such as 2019. In years of low prices, like 2016 or 2020, trading profits can far exceed those of the production business. Last year, both BP and Shell made about $1 billion above their typical profit target in oil and gas trading.
One reason profits are so high is because the three companies can reduce their trading tax bill by routing their business through low-tax jurisdictions—a strategy not available to their oil pumping and refining businesses, which are rooted in physical infrastructure in particular countries. Shell, for example, concentrates all its trading of West African and Latin American crude via a subsidiary in the Bahamas. With just 36 traders in Nassau, Shell reported profits in the Bahamas of $847.5 million in 2019. Yet it didn’t pay a single dollar in taxes on those gains.

 

[Firestar_3x]

Risk assessors are conservative by nature unfortunately, in any field. In my experience it is not known risks that cause accidents, its the unknown ones that no-one ever considered.

So, the risk consultancy... which I joined as a founding member 20+ years ago operates across all major high hazard industrial sectors, we have several large nuclear teams with individuals who have in excess of 40 years sector experience, civil or "other", commissioning, operating, maintaining, decommissioning and everything in-between.

I'm not sure how much I'm prepared to add to this topic, particularly on the nuclear side, but our 250+ consultants perspective you are A. wrong on claiming "risk assessors" are, what you really mean is "overly conservative" and B. wrong in seemingly claiming Hinkley B was shut unnecessarily.

 

[Zenduri]

no he's right 50% more of the profits of bp/shell are from trading , so could be legitimately excluded from windfall tax / disgust.
eg. https://www.bloomberg.com/news/feat...-as-climate-change-worries-rise?sref=Xl91GI8N

and even these secret Cornwall associates cap estimations, how do they intergrate energy bought on the futures market,
so this stupid 'we estimate the point cost of a kw/hr in December will be X, so the CAP is Y" is misleading

edit: I'll spam the thread with an excerpt

What i mean is its not down to you or I trading gas futures, its the companies like shell and BP who are essentially trading and bumping their own product and the buyers are the energy suppliers at the end of the day. It doesnt help that basically most of europe including ourselves dont have our gas storage filled let alone the day to day usage so this drives cost too.

 

[jpaul]

What i mean is its not down to you or I trading gas futures, its the companies like shell and BP who are essentially trading and bumping their own product and the buyers are the energy suppliers at the end of the day. It doesnt help that basically most of europe including ourselves dont have our gas storage filled let alone the day to day usage so this drives cost too.

yes (Eu.. de) gas storage helps yes , you can store the gas you signed up to on the futures market when it is delivered
nonetheless the uk energy company can buy on that market or via a hedging intermediary, but they won't be paying the spot-market value which gets bandied around in the press,
which I find disingenuous in the way cornwall insites & (I'm not the messiah) Lewis present data.

 

[Zenduri]

yes (Eu.. de) gas storage helps yes , you can store the gas you signed up to on the futures market when it is delivered
nonetheless the uk energy company can buy on that market or via a hedging intermediary, but they won't be paying the spot-market value which gets bandied around in the press,
which I find disingenuous in the way cornwall insites & (I'm not the messiah) Lewis present data.

They dont present it in a 100% creidble way i agree. However the big suppliers are buying a year in advance due to regulation over a certain customer base but the smaller ones are buying month ahead and day prices, this was one of the reasons why so many went pop as they were too exposed to short term hikes in prices and didnt have the capital

 

[Goksly]

Gas and oil prices are at an all time high. No worries - I'll sign up to one of the energy provides "100% green" tariffs. Oh. Even more expensive. Guess wind has been impacted by the war as well.

 

[Zenduri]

Gas and oil prices are at an all time high. No worries - I'll sign up to one of the energy provides "100% green" tariffs. Oh. Even more expensive. Guess wind has been impacted by the war as well.

Sigh getting fed up of explaining this. The green energy is offset through green energy certificates not that its only generated through green measures. Yes its underhanded but thats how the world handles "carbon zero" and "Green energy" by offsetting with carbon and green energy certificates.

Im sure you wouldnt be too happy when the wind stops blowing and your power goes off until its windy again ...

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We are having a good generation day for wind today though

 

[SDK^]

Gas and oil prices are at an all time high. No worries - I'll sign up to one of the energy provides "100% green" tariffs. Oh. Even more expensive. Guess wind has been impacted by the war as well.

All generated electricity is priced the same as gas generated -> Google still works - do some of your own research, rather than post silly statements.

 

[the shadow]

Gas and oil prices are at an all time high. No worries - I'll sign up to one of the energy provides "100% green" tariffs. Oh. Even more expensive. Guess wind has been impacted by the war as well.

It was a breeze for those who signed up last year for a 2 years fixed deal

 

[McPhee]

Gas and oil prices are at an all time high. No worries - I'll sign up to one of the energy provides "100% green" tariffs. Oh. Even more expensive. Guess wind has been impacted by the war as well.

Here's a nice, easy to understand explanation from Good Energy:

Why does the price of gas drive electricity prices | Good Energy

We look at why the price of gas affects the prices of renewable energy and what this means for companies like us.

www.goodenergy.co.uk

It's something that many of the "green" suppliers are trying to change. I know that, for example, Octopus are working on alternative proposals as to how our energy market should work (with the intention of lobbying government to change how the system works).

 

[Mercenary Keyboard Warrior]

These cornwall estimates seem pretty accurate to me. I suspect they have access to enough data to know quite accurately what OFgem will be using and hence able to predict the cap.
I believe that the data Ofgem use is supplied to them by the major elec/gas companies so its not inconceivable cornwall get some/most of the same data (seeing as two parties will know that data)

There is only one way a country can sustainably (to their finances) control domestic pricing, part luck part political will
1) having control over production of a significant portion of the required energy domestically (luck)
2) having the political will to offer this to the countries population at a level thats below global market price via subsidy or virtual state control (political will)

The UK isn't actually too bad on 1, but absolutely no plan for 2. So suck it up.

 

[SDK^]

Here's a nice, easy to understand explanation from Good Energy:

Why does the price of gas drive electricity prices | Good Energy

We look at why the price of gas affects the prices of renewable energy and what this means for companies like us.

www.goodenergy.co.uk

It's something that many of the "green" suppliers are trying to change. I know that, for example, Octopus are working on alternative proposals as to how our energy market should work (with the intention of lobbying government to change how the system works).

Also this video from the Octopus CEO, explaining the gas Marginal generator pricing impacting Green energy. Contracts for Difference (CfD) on green energy is helping to reduce the price difference.

 

[Zenduri]

These cornwall estimates seem pretty accurate to me. I suspect they have access to enough data to know quite accurately what OFgem will be using and hence able to predict the cap.
I believe that the data Ofgem use is supplied to them by the major elec/gas companies so its not inconceivable cornwall get some/most of the same data (seeing as two parties will know that data)

There is only one way a country can sustainably (to their finances) control domestic pricing, part luck part political will
1) having control over production of a significant portion of the required energy domestically (luck)
2) having the political will to offer this to the countries population at a level thats below global market price via subsidy or virtual state control (political will)

The UK isn't actually too bad on 1, but absolutely no plan for 2. So suck it up.

They are pretty accurate but its the way its presented. Saying the average bill will be £3400 means nothing to me when my bill each year is barely £1200 currently, They should put it out as a percentage which better allows people to gauge how it effects them.

 

[Foghorn Leghorn]

There is only one way a country can sustainably (to their finances) control domestic pricing, part luck part political will
1) having control over production of a significant portion of the required energy domestically (luck)
2) having the political will to offer this to the countries population at a level thats below global market price via subsidy or virtual state control (political will)

The UK isn't actually too bad on 1, but absolutely no plan for 2. So suck it up.

This is what should have been put in place decades ago, a cross party agreement to allow the construction of enough nuclear power stations to cover the entirety of the UK's energy needs. The energy should have been provided at cost + a percentage to the UK population, any excess generated sold at the going rate.
As a nation we should be able to cover all our energy, water and food requirements.

Unfortunately we've spent decades voting in weak, ineffectual and morally bankrupt politicians. We're now beginning to reap what we've sown.

 

[Mercenary Keyboard Warrior]

They are pretty accurate but its the way its presented. Saying the average bill will be £3400 means nothing to me when my bill each year is barely £1200 currently, They should put it out as a percentage which better allows people to gauge how it effects them.

Oh yeah i agree but then thats the Ofgem line isn't it.
Problem is too many of the general public don't understand units and this price cap nonsense just confuses everyone.