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| Britain |
| Record gas prices send chill through suppliers (UK) |
| 2005-06-17 |
| Reading around, its easy to see the dead hand of Kyoto at work here. Demand for gas is soaring everywhere becuase, apart from Nuclear, its the only way to reduce carbon emissions. More insidiously, I suggest that Kyoto targets morphed into energy projections and they are now being exposed as the fiction they are. Winter fuel bills are likely to soar this year as future gas prices hit their highest-ever level yesterday. The price of gas for delivery in October was 66p a therm, some 75pc higher than it was at this point last year and more than double the current spot price. The head of Powergen, Paul Golby, said it was 'difficult to envisage' that gas bills would not rise Energy companies said domestic bills would rise again and World Gas Intelligence, an industry analyst, said factories may be forced to shut for "days, weeks or longer in order to cut gas use". Yesterday, Ofgem, the energy regulator, sought to reassure the market, and pointed to a National Grid Transco report that states there will be enough gas to supply the market. Sonia Brown, Ofgem's director of markets, said this winter would be "the same as last year". However, Ofgem recently gave a presentation to the industry which forecast that gas supplies would drop by 20m cubic metres a day this winter, more than 5pc of total demand, as production in the North Sea dwindles "faster than anticipated". Actually demand has risen faster than anticipated and this has resulted in more production and hence declining production yields. A spokesman for Powergen, one of the largest domestic suppliers of gas, said: "The whole world and his wife are saying that prices are getting higher." The head of Powergen, Paul Golby, said it was "difficult to envisage" that gas bills would not rise, and that any company that held them this year would only have to raise them more aggressively next year. British Gas warned last month that it may increase prices for the third time in a year and a half. Sir Roy Gardner, chief executive, said: "If wholesale prices stay at these levels an appropriate retail price increase will be necessary". His comments were echoed by Ian Marchant, the chief executive of Scottish and Southern Energy. Gas prices have been forced up because the UK has been caught short as new pipelines to import gas from Norway and Russia are still under construction. This is becuase the projections said they wouldn't be needed until 2007 - refer to my opening comment. Last winter, prices ran at between 20p and 40p a therm, although they spiked up to £1.70 during a cold snap. A report from consultancy Global Insight for the Government showed that industrial users responded to the gas price spike last year by shutting factories and cutting consumption by 27pc. The current infrastructure - the interconnector between Bacton and Zeebrugge in Belgium - provides a spasmodic supply of gas to the UK. Mark Smedley at World Gas Intelligence said that, at one point last winter, the price of gas in the UK was 30p a therm higher than on the continent, but the interconnector still did not provide enough gas. The failure of the market to correct itself is under investigation by the European Commission, but Mr Smedley said the large French and German energy companies dictated the way the gas flows through the pipeline. Lets blame those nasty Europeans. Gas traders are also worried about competition from the United States for supplies of liquefied natural gas. And lets blame the Americans as well even though the UK doesn't (as far as I can determine) import any LNG - although its first terminal is due to open this year. |
| Posted by:phil_b |
| #7 gat a US refinery or two online above normal, and it drops $10.bbl....whoda thunk it? |
| Posted by: Frank G 2005-06-17 21:56 |
| #6 There could be more supply if certain OPEC nations' dictators (I won't mention Chavez by name) didn't screw up their industry to make it more politically reliable. |
| Posted by: Jackal 2005-06-17 21:19 |
| #5 My theory is that those countries that can't afford petrol will stop using it first. :) I look for a steep drop in demand from India, China and Brazil. Followed by an instant 3 million brl a day surplus. |
| Posted by: Shipman 2005-06-17 19:59 |
| #4 OPEC countries are raising their quotas to keep with the demand. Quotas don't satisfy demand, supply does. There is no more available supply in OPEC. Thats it for a number of years. Economic growth will slow until demand for oil stops increasing or alternate energy supplies come on stream. This means a severe and prolonged recession like none of us have ever seen. This seems inescapeable to me, but I'd be interested to hear alternate scenarios. |
| Posted by: phil_b 2005-06-17 18:15 |
| #3 That's called greed, methinks. |
| Posted by: .com 2005-06-17 16:22 |
| #2 phil-I read today that the price of oil hit a new record high of $58.47/barrel. I'll post the link for everyone to read. I guess it could be worse - OPEC has some pretty anti-American nations like Iran, Venezuela, Nigeria - OPEC could choose to turn down their spigots so scarcity would enhance the value of their product but they aren't doing so. In fact, OPEC countries are raising their quotas to keep with the demand. |
| Posted by: Thotch Glesing2372 2005-06-17 16:03 |
| #1 Also oil is up to just under $57/barrel, although this will be a record high priced in Euros. |
| Posted by: phil_b 2005-06-17 04:00 |