[News] The Energy crisis

[LamieRobertson]

Most of these companies are not energy producers but energy traders. When the utility companies were privatized and deregulated it paved the way for foreign ownership and companies like these. Essentially all they do is sign you up and bill you each month, something anyone could do. Be it electricity or gas, the distribution network is already in place and the actual production is done by other people, they are merely adding another layer (and profit) without adding anything of value to the process. Obviously the shortage of gas is hitting many other countries and to a degree is beyond government control, but it is exacerbated by, for want of a better word, all these spivs who have now become involved

The regulator has a lot to answer for…just how well were they regulating!

 

[Neville's Breakfast]

Most of these companies are not energy producers but energy traders. When the utility companies were privatized and deregulated it paved the way for foreign ownership and companies like these. Essentially all they do is sign you up and bill you each month, something anyone could do. Be it electricity or gas, the distribution network is already in place and the actual production is done by other people, they are merely adding another layer (and profit) without adding anything of value to the process. Obviously the shortage of gas is hitting many other countries and to a degree is beyond government control, but it is exacerbated by, for want of a better word, all these spivs who have now become involved

You’re right that they are not energy producers. However, the role of signing up and billing cannot be dismissed as spivs not adding value. If they weren’t doing it competitively then a few large players would be taking this extra layer of profit but at a higher price. It is absolutely not the case that large utilities would be prepared to run a billing department at zero profit.

 

[Neville's Breakfast]

The regulator has a lot to answer for…just how well were they regulating!

Extra regulation could/should come in the form of enforced hedging. Some of these smaller players seem to have forgone hedging (as a cost saver) which effectively has given them a short trading position. That shouldn’t be allowed.

 

[drew]

We're in exactly the same boat. Pretty scathing email from their CEO announcing the closure; seems to me theres enough evidence to lay the blame for this utter fiasco squarely in one place and one place alone.

James O'Brien just commented that apparently Germany has 90 days storage capacity whereas we only have 7 days!

 

[Cheshire Cat]

I just did a couple of test comparisons to see what deals are out there - my current deal doesn't finish until next year provided the supplier survives.

Go Compare has nothing, and MoneySupermarket was offering only two deals with small suppliers at almost double what I am paying now. So I won't bother.

 

[Neville's Breakfast]

James O'Brien just commented that apparently Germany has 90 days storage capacity whereas we only have 7 days!

As usual with these shock jocks it is a bit more complicated than that. That 90 day storage number in Germany is the availability if storage is full. It isn’t and that’s the problem. Post Covid recovery, the cold last winter and strong demand from China has prevented a replenishment of European stocks and that is particularly marked in Germany and Austria (who do have ample theoretical storage capacity). There just hasn’t been the incentive for traders to fill storage because of the premium of prompt gas prices over forward contracts (backwardated market). Stocks of any commodity are increased when it is possible to buy now for future delivery and earn a profit for doing so (contango market) that offsets the costs of storage. Where the thrust of what JOB is saying is correct is that the UK has adopted a just in time policy to storage as this avoids the costs of storage but the policy has been found out in a time where global supplies are scarce so the UK has had to bid a premium to get gas flowing through the inter connectors. With hindsight nobody would have followed just in time purchasing of anything but it has been a consequence of the cost cutting of the 2008 crash. Unfortunately it does not properly price in stresses like the current gas market or Covid (just in time supermarket purchasing policy). That’s why it is short term cheap. The UK definitely needs an energy policy rethink.

 

[nicko31]

James O'Brien just commented that apparently Germany has 90 days storage capacity whereas we only have 7 days!

Back in 2017 a lot of our energy storage was shut down.

At the time the government was dealing a domestic tantrum that consumed all their energy, instead of securing our own energy.

There were warnings....

https://www.theguardian.com/business/2017/jun/20/uk-gas-storage-prices-rough-british-gas-centrica

Sadly it will be eat for heat some many this winter

 

[Berty23]

Due to brexit and driver shortages but petrol supply chains are now broken too. I just drove past a petrol station and already a queue outside. I had not heard anything but it sounds like BP have said they can’t get fuel to stations. I assume panic buying will follow.

Just off to fill up my car (I am not really)

 

[Thunder Bolt]

Back in 2017 a lot of our energy storage was shut down.

At the time the government was dealing a domestic tantrum that consumed all their energy, instead of securing our own energy.

There were warnings....

https://www.theguardian.com/business/2017/jun/20/uk-gas-storage-prices-rough-british-gas-centrica

Sadly it will be eat for heat some many this winter

Centrica (who do produce energy, rather than selling it to consumers) knew their storage facility was becoming unsafe, but made the decision not to build a new one.

 

[Mellotron]

Is brexit a factor in making our prices higher than they otherwise would be? Yes/no.

We all know the answer.

I can, however, understand why someone who voted for Brexit would find it excruciatingly difficult to acknowledge how much of a disaster it is proving to be, as expected - I would possibly be the same.

Knowing my vote had - even in some small way - contributed to ****ing up the country in many different ways for probably decades to come - that’s hard to stomach.

 

[Mellotron]

Due to brexit and driver shortages but petrol supply chains are now broken too. I just drove past a petrol station and already a queue outside. I had not heard anything but it sounds like BP have said they can’t get fuel to stations. I assume panic buying will follow.

Just off to fill up my car (I am not really)

The driver shortage is due to Brexit - it’s a not a separate issue from Brexit, I’d argue.

 

[Berty23]

The driver shortage is due to Brexit - it’s a not a separate issue from Brexit, I’d argue.

Sorry. I meant different to the energy crisis point. That issue is wider. This is brexit.

 

[vegster]

As usual with these shock jocks it is a bit more complicated than that. That 90 day storage number in Germany is the availability if storage is full. It isn’t and that’s the problem. Post Covid recovery, the cold last winter and strong demand from China has prevented a replenishment of European stocks and that is particularly marked in Germany and Austria (who do have ample theoretical storage capacity). There just hasn’t been the incentive for traders to fill storage because of the premium of prompt gas prices over forward contracts (backwardated market). Stocks of any commodity are increased when it is possible to buy now for future delivery and earn a profit for doing so (contango market) that offsets the costs of storage. Where the thrust of what JOB is saying is correct is that the UK has adopted a just in time policy to storage as this avoids the costs of storage but the policy has been found out in a time where global supplies are scarce so the UK has had to bid a premium to get gas flowing through the inter connectors. With hindsight nobody would have followed just in time purchasing of anything but it has been a consequence of the cost cutting of the 2008 crash. Unfortunately it does not properly price in stresses like the current gas market or Covid (just in time supermarket purchasing policy). That’s why it is short term cheap. The UK definitely needs an energy policy rethink.

Gosh! You have been kept busy putting right all these misconceptions... If you can find the time could you please come up with a good excuse why we pulled out of that EU/ non EU Gas sharing alliance thingy whereby the members agree to supply those in the Group who are running short of Gas as a priority rather than those outside the group... Which is us. Cheers.

 

[nicko31]

Sorry. I meant different to the energy crisis point. That issue is wider. This is brexit.

Think Brexit played it part by not the sole reason. What we do know is all these issues aren't been felt on the same level across continental Europe.

Labour need to get off the fence and call these f**kers out to what they're doing to our country. The government knew were we in the shit with CV, out of political choice they opted to impose maximum pain on us all.

 

[Kinky Gerbil]

The driver shortage is due to Brexit - it’s a not a separate issue from Brexit, I’d argue.

Having the licensing centres shut for a year doesn’t help either.

 

[beorhthelm]

Gosh! You have been kept busy putting right all these misconceptions... If you can find the time could you please come up with a good excuse why we pulled out of that EU/ non EU Gas sharing alliance thingy whereby the members agree to supply those in the Group who are running short of Gas as a priority rather than those outside the group... Which is us. Cheers.

are you thinking of the pipe network we remain part of (and export to), or the marketplace for trading where the prices have risen?

worth pointing out (again) we export much more gas that we get from EU. price is the problem, not supply.

 

[Neville's Breakfast]

Gosh! You have been kept busy putting right all these misconceptions... If you can find the time could you please come up with a good excuse why we pulled out of that EU/ non EU Gas sharing alliance thingy whereby the members agree to supply those in the Group who are running short of Gas as a priority rather than those outside the group... Which is us. Cheers.

I have just tried to share some specialist knowledge. Shame that intimidates you so much. Who in your opinion is short of gas ? Certainly not the UK and certainly not any EU country. The problem here is price not supplies.

 

[vegster]

I have just tried to share some specialist knowledge. Shame that intimidates you so much. Who in your opinion is short of gas ? Certainly not the UK and certainly not any EU country. The problem here is price not supplies.

Oh gosh yes, I'm really intimidated! [emoji5] Right so we have plenty of Gas.. Our Gas... so why has OUR Gas become so expensive for US?

 

[Neville's Breakfast]

Oh gosh yes, I'm really intimidated! [emoji5] Right so we have plenty of Gas.. Our Gas... so why has OUR Gas become so expensive for US?

Why are you being so immature ? Anyway, the answer to your question is that it is not our gas or at least a lot of it isn’t. We also import via interconnectors and buy LNG on global markets. There is no threat to supply because markets work in such a way that we pay higher prices in a competitive market which leads to demand destruction. There is some evidence this is happening already with major industrial users cutting back on their consumption of gas. You have to understand that this is a perfect storm of excess demand and constrained supply to the EU. This is deliberate action by the Russians to put pressure on Germany (in particular) to approve the new Nordstream 2 pipeline. They can do this because they know Europe has not replenished storage for reasons you weren’t interested in my explaining. If you would rather just post uninformed bollocks that suit your politics then just don’t bother replying to my posts.

 

[Deleted member 22389]

Why are you being so immature ? Anyway, the answer to your question is that it is not our gas or at least a lot of it isn’t. We also import via intercomnectors and buy LNG on global markets. There is no threat to supply because markets work in such a way that we pay higher prices in a competitive market which leads to demand destruction. You have to understand that this is a perfect storm of excess demand and constrained supply to the EU. This is deliberate action by the Russians to put pressure on Germany (in particular) to approve the new Nordstream 2 pipeline. They can do this because they know Europe has not replenished storage for reasons you weren’t interested in my explaining. If you would rather just post uninformed bollocks that suit your politics then just don’t bother replying to my posts.

I'm thankful for your posts and for telling the truth about the problems being faced.