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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

#101

Post by proser »

antasvara wrote: post #70
sorokod wrote: post #58

Earlier quoted context omitted.

>you want to be able to smooth out fluctuations in supply and demand. Can you say a bit more about the "you" mentioned? I can imagine "you"s who care only about having heating during wintertime.

From context, it seems that the "you" in question is "a company that runs a natural gas storage space." As a company with fiduciary responsibilities, they likely can't concern themselves too much with the problem you mention.

European utilities are often public utilities that are nationalized in some way, not strictly corporate businesses.

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

#102

Post by guerrilla »

rybosworld wrote: post #83

This is not entirely related to the article: Rising temperatures should reduce demand for fossil fuels as a heating source (I think). Does anyone know if this is already factored into global warming predictions?

I don't know but just so you know, it can also make it a lot worse by cutting off the gulf stream which is how we're not spending even more energy in (especially northern) Europe.

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

#103

Post by reportgunner »

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.

4 seasons in 12 months = 3 months per season. March is not winter, it's the start of spring.

March, April, May = Spring

June, July, August = Summer

September, October, November = Autumn/Fall

December, January, February = Winter

No Winter has started this year yet, we have one more month of Autumn/Fall.

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

#104

Post by throwaway4aday »

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…

> a bearable (albeit not overly comfortable) 19 degrees celsius

Interesting to see what temp other people keep their homes at. Our normal indoor temp is 19 and I sometimes find that too warm.

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

#105

Post by sorokod »

jefftk wrote: post #73
sorokod wrote: post #58

Earlier quoted context omitted.

>you want to be able to smooth out fluctuations in supply and demand. Can you say a bit more about the "you" mentioned? I can imagine "you"s who care only about having heating during wintertime.

The standard "smooth out the fluctuations" approach gives an extremely low probability of running out of fuel during the winter at a reasonable cost, but only assuming sufficient fuel imports. Because of the loss of Russian gas and not having sufficient LNG infrastructure to make up it, Europe will burn gas faster than replacement when it's sufficiently cold, and if the cold weather lasts long enough they could run o…

Given the disrupted gas supply, what alternatives are there to the "expensive and wasteful strategy" ?

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

#106

Post by sorokod »

Dylan16807 wrote: post #77
sorokod wrote: post #58

Earlier quoted context omitted.

>you want to be able to smooth out fluctuations in supply and demand. Can you say a bit more about the "you" mentioned? I can imagine "you"s who care only about having heating during wintertime.

One of the important factors in ensuring heating is keeping the movement of gas from being too unpredictable. One of the important factors in keeping it affordable is having a stable supply.

Stable supply is not what we are looking at here.

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

#107

Post by jefftk »

sorokod wrote: post #105
jefftk wrote: post #73

Earlier quoted context omitted.

The standard "smooth out the fluctuations" approach gives an extremely low probability of running out of fuel during the winter at a reasonable cost, but only assuming sufficient fuel imports. Because of the loss of Russian gas and not having sufficient LNG infrastructure to make up it, Europe will burn gas faster than replacement when it's sufficiently cold, and if the cold weather lasts long enough they could run o…

Given the disrupted gas supply, what alternatives are there to the "expensive and wasteful strategy" ?

I do think expensive and wasteful is the right choice here.

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

#108

Post by leobg »

tuukkah wrote: post #94
leobg wrote: post #87

Earlier quoted context omitted.

So can I run a line to your house, please?

It might be more practical to invest in solar and wind. I hear solar can be profitable even here in the north.

Unfortunately not in winter though, I think.

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

#109

Post by i_am_proteus »

jefftk wrote: post #5

Normally you run storage facilities neither all the way full nor all the way empty: you want to be able to smooth out fluctuations in supply and demand. Because of the war Europe is running gas storage near its upper limit, which means we should expect less flexibility and more price volatility: they won't want to draw them way down if we get a serious cold snap, and they have nowhere to put extra gas if it's warmer…

Yes, and: natural gas is a byproduct of oil production. For decades, natural gas was flared off as an unwanted byproduct. It is still flared off today when it's uneconomical to capture it.

Unlike other goods where supply will drop if there is insufficient demand, a lot of natural gas gets produced regardless due to oil production. It gets sent to market because there is no local storage capacity and the alternative would be to flare it off.

Shenanigans in the futures market aside, this contributes to (temporary) oversupply driving prices negative.

The same warehousing phenomena result in this negative price probably not lasting very long. Barring an extremely warm next few weeks, expect the price to be back up soon.

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

#110

Post by daniel-cussen »

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…

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