From NOT A LOT OF PEOPLE KNOW THAT
By Paul Homewood
It is a general consensus nowadays that gas prices are “high” and this is why electricity prices are also “high”.
But exactly how “high” are natural gas prices?
https://www.ofgem.gov.uk/news-and-insight/data/data-portal/wholesale-market-indicators
We all know of course that natural gas prices spiked just before the Ukraine war started, but they also fell back rapidly during the following 12 months or so.
In June this year, according to OFGEM, wholesale gas prices were 86.28p/therm, compared to 46.10p in January 2015, an increase of 87%. But we have also had something called inflation in the last ten years. Since January 2015, RPI has risen by 58%, so the real increase is much smaller than supposed:
https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/chaw/mm23
The following chart takes out the inflationary effect and shows some very interesting results:
As we can see, real prices this year are no higher than they were in 2018.
As with all commodities, gas prices are always volatile, following the vagaries of supply and demand. Prices fell sharply in 2015 and 2016 as a result of a glut of supply. You may recall the price spikes between 2012 and 2014 when demand exceeded supply. That led to wells reopening and a glut, the seemingly never ending cycle we see in markets like oil and mining.
Prices obviously dipped to ridiculously low levels during COVID lockdowns as demand evaporated.
But ignoring COVID and Ukraine, current gas prices are not excessive by historical standards, and therefore cannot explain why electricity prices are so high now.
Tomorrow I’ll do the same exercise with electricity markets.
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I’m happy that I switched our kitchen range to natural gas this year. Our water heaters and furnace are also work off natural gas. They work great and are economical.
Irrespective of what is going on elsewhere
Natural Gas Price Trends In The UK Can Only Go Up.
But by committing economic suicide, you’re saving the planet! Well, not so much, but you must carry on. Milliband can soon declare the UK industry-free.
I? I am a mere serf in the neo-feudal disUnited Kingdom
I pay taxes and choose which bottom gets to represent the constituency every 5 years.
I have no say in anything.
Ah so true…
I told you! We’re an
Anarcho-syndicalist commune! We’re taking
Turns to act as a
Sort of executive-officer-for-the-week –
Arthur: (uninterested) Yes
Man: But all the decisions of that officer
Have to be ratified at a
Special bi-weekly meeting –
Arthur: (perturbed) Yes I see!
Man: By a simple majority
In the case of purely internal affairs –
Arthur: (mad) Be quiet!
Man: But by a two-thirds majority
In the case of more major –
Arthur: (very angry) BE QUIET! I order you to be quiet!
Woman: “Order”, eh, who does ‘e think ‘e is?
Arthur: I am your king!
Woman: Well I didn’t vote for you!
Arthur: You don’t vote for kings!
Woman: Well how’d you become king then?
(holy music up)
Arthur: The Lady of the Lake – her
Arm clad in the purest shimmering samite
Held aloft Excalibur from the
Bosom of the water, signifying by
Divine providence that I, Arthur
Was to carry Excalibur THAT is why
I am your king!
Man: (laughingly) Listen: Strange women lying in ponds distributing swords
Is no basis for a system
Of government! Supreme executive power
Derives from a mandate from the masses
Not from some farcical aquatic ceremony!
Arthur: (yelling) BE QUIET!
Man: You can’t expect to wield supreme
Executive power just ’cause some
Watery tart threw a sword at you!
Arthur: (coming forward and grabbing the man) Shut UP!
Man: I mean, if I went ’round
Saying I was an emperor, just because some
Moistened bint had lobbed a scimitar at me
They’d put me away!
Arthur: (throwing the man around) Shut up, will you, SHUT UP!
Man: Aha! Now we see the
Violence inherent in the system!
Arthur: SHUT UP!
Man: (yelling to all the other workers) Come and see the violence inherent
In the system! HELP, HELP
I’m being repressed!
And of course, The Green Blob opposes fracking. The UK is an obvious place for it, having extensive coal seams.
But they oppose anything that might work, like fracking or nuclear.
You can frack in the UK but only if you are a virtue signalling greenie wanting to get to geothermal heat.
https://www.cornwalllive.com/news/cornwall-news/geothermal-testing-restarts-eden-project-6812277
Any opportunity to rub people’s noses in it…
Outright frac bans are mostly silly. There are very few, if any, places on earth that can make it work economically, and also do it right and responsibly. The UK should approve projects that:
The juiciest shale plays are still in the US, and activity here is sunsetting, even though many of those conditions have been ignored from the start. The UK, with much less geological and reservoir potential, should be allowed to open itself up to proper development, and record the audible yawns, and then the relentless, subterranean, rent seeks from the potential producers.
How can I put this nicely?
Nobody gives a shit what you think big oily boob.
oh maybe I could have been nicer. Oops.
I guess all those companies making money by fracking, are just a figment of our imaginations.
My natural gas prices spike in November, just when I turn on my furnace. Then they magically drop again in April, when I turn off my furnace.
I’m talking about the price per therm of gas, not the fact that I’m using more gas during the heating months.
It happens every year, so its not a result of the Ukraine war. It’s the result of a Public Utilities Commission that permits gouging.
It’s called supply and demand. When the demand goes up the moment you turn the heat on, and when everybody else turns their heat on at the same time, the price goes up because the demand rises while the supply doesn’t. It’s basic economics. It’s not price gouging.
The economics may include various things that are ways of providing higher supply in winter. Storage has to be paid for, including the costs of round trip losses in and out of storage. If (like the UK) winter supply is supplemented by LNG imports then the cost goes up, because LNG is more costly than UKCS and Norwegian pipeline gas. Maybe your state has to ship in extra gas from further afield one way or another – more pipeline costs to be paid for from the winter supply.
Many electric utilities charge more for power during peak periods and less at other times?
Are they also gouging?
Higher prices signal producers, to make more. Higher prices signal consumers to consume less. Econ 101, not some massive conspiracy as some want to believe.
If price didn’t go up and supply remains constrained, you would end up with supply outages. Or rationing would be required. Doonman’s thinking worked real great in the old Soviet Union. Where there was no price gouging and also nothing available when you needed it.
It’s a little easier to store natural gas than windmill juice, but not much. It’s not like coal where you can stockpile a season’s supply.
Supply in the USA is augmented by stored gas. Storage is about 3 trillion cubic feet of gas. My town sits on top of a storage field.
Which is less than 10% of demand, and further constrained by jackass Democrats who block pipeline construction.
Price going up when demand increases and down when it decreases is not price gouging.
That’s just basic economics.
This article is just waffling. Exposure to high gas prices is the single largest contributor to high electricity prices, with 53% of the rise since the energy crisis due to wholesale prices driven by gas.
If you don’t care about the environmental concerns (and you should) of conventional fuels, exposure to high volatility in gas prices should be a wake up call in itself. The UK needs greater energy independence.
Who cares what the data shows. The high priests have spoken and declared it can’t be wind and solar, you must find another villain to blame.
There are no environmental issues with fossil fuels. Your paranoid fantasies not with standing.
Yet you don’t care about the MASSIVE environmental damage done at all stages of wind and solar.
Toxic chemicals used in their production, and huge toxic sludge lakes.
Massive areas of the farmland and bushland environment destroyed by their implementation
Massive volumes of toxic landfill at the end of their short life
But you don’t care. ! Why is that?
CO2 does not do any “damage” , it is the life-gas of the world.
UK could have energy independence using their own coal and gas…. NEVER with wind and solar.
We can have energy independence at the stroke of a pen:
https://deepresource.wordpress.com/2015/04/07/fracking-is-for-amateurs/
“Scientists have discovered vast deposits of coal lying under the North Sea, which could provide enough energy to power Britain for centuries.
Experts believe there is between 3 and 23 trillion tonnes of coal buried in the seabed starting from the northeast coast and stretching far out under the sea.
Data from seismic tests and boreholes shows that the seabed holds up to 20 layers of coal – much of which could be reached with the technology already used to extract oil and gas.
In comparison: so far the world extracted ‘merely’ 0.135 trillion ton of oil, a small fraction of the coal reserves located beneath the North-Sea.”
And look at the date on that link above for the coal beds under the North Sea: 2015. I found a World Coal website that has a similar article which dates to March of 2014.
It is ridiculous that those beds have been sitting down there untapped for 10 years while Britain struggles to deal with the costs of and economic damage from Net Zero.
There is no climate crisis. Oh, the pain when we listen to the wrong people.
No worries rhs, just as soon as they finish impoverishing and replacing the population, they’ll get around to burning coal again, and drop the nut zero foolishness.
This comment is just waffling. It contains absolutely no evidence to back up ridiculous claims made.
If you don’t care about economic stability (and you should) of our electricity generation, exposure to ever-increasing electricity prices while gas prices remain fairly static in real terms should be a wake up call in itself. The UK needs reliable, economic electricity generation and greater energy independence.
At least we have some common ground on this point.
But Net Zero common ground on the approach
“reliable, economic” are key words, here.
Great to see that you are advocating AGAINST wind and solar. !
Says the nitwit who thinks buying windmills and solar panels from China while de-industrializing the cradle of the Industrial Revolution is somehow reliable, economic, environmentally sound, or independent.
Funny how the solution he wants to force on everyone, is incapable of delivering the outcome he claims to want.
Well, that is evidence free waffle. Don’t even know where you imagined your 53% figure from. Did you even look at the chart in the article that disproves your claim?
Don’t bother replying, this is a troll. Don’t feed it.
He’s baaaaack!
So, stop turning off the coal. Start turning the coal back on. Diversity is our strength (as long it is not being implemented simply for the sake of diversity goals … in which case it is a bad thing).
(Also, Japan needs greater energy independence. Also Taiwan needs greater energy independence. Also, Cyprus needs greater energy independence. Also, Ireland needs greater energy independence. I don’t know what my point is … I just say stuff that I have heard somewhere else.)
In the USA, Joey “Joke” Biden gave us 30% + price increases in everything. Call it Bidenflation. Natural gas prices have to go up because of the maintenance and labor and equipment costs associated with the industry.
Natural gas prices are high where you depend on LNG imports and buy them on the spot market. Well Europe please blaim yourself and the idiocy you voted for.
Never bite the hand that feeds or supplies you.
You also create high prices due to artificial shift in demand, f.e. shutting down reliable and cheap coal plants to have them replaced by gas turbines. Natural gas used to be for heating and cooking purposes and not to supply the grid with electricity except to cover spikes in demand.
The interesting crisis in the UK Net Zero saga will come sometime in very late 2005 or maybe 2006. It depends on the October choices when the Chancellor presents the next budget. Raise taxes enough, and the crisis may be postponed. It will still happen, but it will be the result of a recession caused by the tax increases, and that will take time to work through and lead to a bond market revolt. Bottle it, try and present a sort of reverse hockey stick when spending falls dramatically in the last year of this Parliament, but continue to raise borrowing in the short term, and the crisis will happen shortly after the budget and will be due to a bond market revolt late this year.
Either way at some point, without a radical change by the government, the IMF will be called in. At that point it will become clear to everyone in the media and political class that, in addition to the welfare and public sector spends, a main contributor to the UK financial mess is Net Zero. The IMF will enforce not only austerity, it will also enforce honest public accounting.
It seems pretty clear that they do not have the intestinal fortitude to take any action which will avert the arrival of the IMF.
So this will mean radical entitlement and public sector spending cuts on a Greek scale. But the interesting question is whether the IMF will also force the abandonment of Net Zero,
Informed opinion at the moment appears to be that they will simply require sufficiently draconian spending cuts that it will be politically impossible to do them without abandoning Net Zero totally.. Its an interesting question, and not at all clear. It may be that what looks politically impossible from the outside looks like the only acceptable solution to the fanatics on the eco-left of the Labour party. They will be faced with a choice: in either case they have to dismantle much of the welfare apparatus and reduce public sector employment and compensation. But in one case they try and keep net zero and make savings elsewhere, in the other they let net zero go and try to save some welfare. Not at all clear which way they go. Or if they are even capable of agreeing on a course of action.
The killer is that they have a huge majority, and are untouchable for another 4 years. The struggle within the Party and its union financiers is going to be something to behold. As indeed is the result of whatever choice they end up in.
Is a DeLorean involved…?
Flux capacitor on the fritz again, apparently. I won’t laugh, sometimes I think it’s the 1990s.
How long until Mr. Fusion?
Forty years, Don. Always forty years.
Are you mad, Michel? They’d sooner enforce immigration law than abandon Net Zero.
Not only that but gas is always there so long as the government doesn’t interfere.