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Europe now has so much natural gas that prices just dipped below zero

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Re: Europe now has so much natural gas that prices just dipped below zero

#31

Post by dr_faustus »

I really don't understand the doom and gloom wrt next year. What was obviously completely underestimated was the elasticity of consumer demand for gas. In Germany, consumers are using 25% less gas even if you account for the weather.

So with increased supply from Netherlands and Norway, even a limited amount of LNG will probably be enough to fill the storage again and compensate the missing Russian gas (which accounted for about 40% of the German gas supply.

We, too, have not switched on the gas based heating yet. Instead, we are using a mix of wood and infrared electrical heaters to keep the rooms at a bearable (albeit not overly comfortable) 19 degrees celsius.

Re: Europe now has so much natural gas that prices just dipped below zero

#32

Post by colechristensen »

Silverback_VII wrote: post #21
mensetmanusman wrote: post #7

This is a better situation than the reverse. It’s fortunate the winter has been mild so far. Will be interesting if the LNG industry can keep pace and replace Russia for good.

>LNG industry can keep pace and replace Russia for good. Nobody can replace Russia and their resources in the long-term.

North American petroleum and developing solar and nuclear resources probably can.

Re: Europe now has so much natural gas that prices just dipped below zero

#34

Post by csours »

cj wrote: post #20
csours wrote: post #12

You have different markets essentially - there is a market for delivery, and a futures market. The market for delivery briefly went price negative. This is dominated by what is in the pipeline right now and what volume of gas is being pulled from the pipeline right now. The futures market is still positive. This market is served by LNG and gas that is still in the ground. The price here is dominated by risks. --- The…

> The above model is oversimplified and wrong. Can you share anything that would help us commoners reading internet comments understand why the analysis is wrong?

There are more than 2 markets. The dominating factors change based on market conditions.

Re: Europe now has so much natural gas that prices just dipped below zero

#36

Post by anm89 »

Different countries have very different storage capacities. Some nations have most of their years demand in storage capacity whereas others like the UK have only a few days and require a constant flow.

If you are one of the countries that can store a whole year this is great news. If you're Britain, you could still be out of gas and paying exorbitant prices a week from now

Re: Europe now has so much natural gas that prices just dipped below zero

#37

Post by behringer »

dr_faustus wrote: post #31

I really don't understand the doom and gloom wrt next year. What was obviously completely underestimated was the elasticity of consumer demand for gas. In Germany, consumers are using 25% less gas even if you account for the weather. So with increased supply from Netherlands and Norway, even a limited amount of LNG will probably be enough to fill the storage again and compensate the missing Russian gas (which account…

I imagine you'd be using gas if you were paid to use it. Sadly market prices in the consumers favor seems to rarely make it to actual consumers.

Re: Europe now has so much natural gas that prices just dipped below zero

#38

Post by remus »

qeomash wrote: post #33

then why are we still paying so much for it?

I think the article is misleading. The spot price is about supply and demand over an extremely short time period and has dipped below zero because at the moment gas storage in europe is very full, so if you've got a load of natural gas to sell no one is buying because there's nowhere to put it. This is probably related to unseasonably warm temperatures in Europe at the moment, so people are using less gas than expected to heat their homes.

The high prices you pay as a homeowner are to do with high expected demand over to winter relative to the available supply, because the supply has been seriously reduced due to the war in Ukraine.

Re: Europe now has so much natural gas that prices just dipped below zero

#39

Post by ralphmelish »

iso1631 wrote: post #28
ralphmelish wrote: post #22

Earlier quoted context omitted.

What are the kWh prices in Amsterdam? I'm in London and would need to consume more than 1,700 kw to pay that much (£0.3866 per kWh, £0.3849 standing charge). Edit: I'm also on a variable contract

How variable -- how many times a day does your price per kwh change?

It doesn't change during they day, it only changes when the government approves price increases. I guess variable means a different thing in the UK. Do you have peak and off-peak prices?

Re: Europe now has so much natural gas that prices just dipped below zero

#40

Post by remus »

qeomash wrote: post #35

Can anyone ELI5 on to why are we paying so much for it then?

Copying my answer from another comment:

The spot price is about supply and demand over an extremely short time period and has dipped below zero because at the moment gas storage in europe is very full, so if you've got a load of natural gas to sell no one is buying because there's nowhere to put it. This is probably related to unseasonably warm temperatures in Europe at the moment, so people are using less gas than expected to heat their homes.

The high prices you pay as a homeowner are to do with high expected demand over to winter relative to the available supply, because the supply has been seriously reduced due to the war in Ukraine.

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