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Mild autumn weather has sent European gas prices plummeting

economist.com

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Re: Mild autumn weather has sent European gas prices plummeting

#111

Post by dotancohen »

klodolph wrote: post #51
evandijk70 wrote: post #19

Earlier quoted context omitted.

The seriousness of climate change is not lost on me, but your comment is rather heartless. In the UK the 'eating or heating?' question is real for many families this winter. It is fair to say that the warm October was a gift from the gods.

"Heartless" is uncalled for. The warmer weather may mean that fewer people are suffering today, but it is also a symptom of a trend that leads towards more suffering in the future. Is it heartless to think of those people in the future?

  > Is it heartless to think of those people in the future?
Are those people in the future voting today? That's what drives policy.

Re: Mild autumn weather has sent European gas prices plummeting

#112

Post by MichaelZuo »

m000 wrote: post #110
kuratkull wrote: post #97

Earlier quoted context omitted.

People seem to expect the free market to adapt immediately, for consumers immediate benefit. The market will regulate itself, but it may not happen in timeframes that people are comfortable with.

No, consumers just expect it to show consistent reaction times. A rumour is typically enough to warrant an overnight price hike in consumer prices. While for experiencing reductions, consumers have to wait for a few months for the market to "adapt". And in the end, it usually is the consumers that adapt to the increased prices, so companies don't see any good reason to reduce them.

That is how the market works?

Look at any stock in any stock market that had a highly positive or negative rumour associated. You will see an immediate spike or dip in value and, a slow regression to the mean.

Re: Mild autumn weather has sent European gas prices plummeting

#113

Post by sph »

Am4TIfIsER0ppos wrote: post #86
m000 wrote: post #62

Gas prices plummeting, energy bills soaring. The market will regulate itself. /s

The market is unable to function normally because of government interference. I expect there is a supplier and a contract somewhere that will give you the spot price. Furthermore the temperature has dropped so I expect demand has increased again so are you really sure you want that contract?

I am ambivalent on the idea of a completely free market.

Because while I believe it would self-regulate, in a vacuum (or anarchic system), a free market paired with a government means interference, nepotism, laws that favour monopolies and kills competition.

So when people like Liz Truss enter 10 Downing Street and claim they want to enact "free market policies", the result is just utter economic upheaval and chaos that hurts regular people further.

Re: Mild autumn weather has sent European gas prices plummeting

#114

Post by photochemsyn »

marcinzm wrote: post #100
photochemsyn wrote: post #92

Earlier quoted context omitted.

You have to add on the 34 bcms to the 45 bcms for a total of 79 billion cubic meters expected to be exported to Europe in 2022. Prices in Europe for gas seem to be about 10X higher than in the USA. Costs of LNG export are also higher, but I imagine the profit return on those European sales is about as large as their total profit on all domestic USA sales (and note domestic prices have doubled as well). This is pretty…

>You have to add on the 34 bcms to the 45 bcms for a total of 79 billion cubic meters expected to be exported to Europe in 2022. The 34 was already being exported so it's sort of disingenuous to add it in terms of supply/demand impact. >Costs of LNG export are also higher, but I imagine the profit return on those European sales is about as large as their total profit on all domestic USA sales (and note domestic price…

Well, the amount the US is expected to send to Europe in 2022 is at least 79 billion cubic meters. The price differential relative to selling that gas in the US @ ~$4 per mmBTU (pre-inflation 2021) vs in Europe @ $34 per mmBTU (post-inflation 2022), where 1 bcm = ~36 million mmBTU is what?

I get an addition $85 billion in gross revenue relative to selling that gas domestically (where there was a supply glut). Even if you just add on the excess shipped to Europe relative to 2021, that's at least an additional $40 billion.

Add on the ~doubling of domestic gas prices from 2021 to 2022 which is for that 827 bcm used domestically, hmm... roughly another additional $60 billion in revenue.

So, the Ukraine war has brought a windfall revenue gain to US gas producers on the order of $100 billion for 2022, right?

As far as agenda, mostly I'm interested in accurate information.

Re: Mild autumn weather has sent European gas prices plummeting

#115

Post by photochemsyn »

ericmay wrote: post #103
photochemsyn wrote: post #92

Earlier quoted context omitted.

You have to add on the 34 bcms to the 45 bcms for a total of 79 billion cubic meters expected to be exported to Europe in 2022. Prices in Europe for gas seem to be about 10X higher than in the USA. Costs of LNG export are also higher, but I imagine the profit return on those European sales is about as large as their total profit on all domestic USA sales (and note domestic prices have doubled as well). This is pretty…

> This is pretty basic supply and demand stuff. It's hard not to conclude that a major US goal was cutting Europe off from Russian gas, and replacing that with American LNG. You can find all sorts of quotes to this effect from the US government before 2022: It’s actually very easy to conclude that this is not the case because selling a few billion dollars worth of oil simply isn’t worth global destabilization. To the…

It's more like an extra $100 billion in revenue. Not counting the military procurement bill, which is what, approaching $20 billion? This war is a real cash cow for certain sectors of the US government (fossil fuels and defense contractors), although the resulting inflation isn't doing anyone else any favors.

Re: Mild autumn weather has sent European gas prices plummeting

#116

Post by radu_floricica »

tsimionescu wrote: post #107
radu_floricica wrote: post #64

Earlier quoted context omitted.

Yeah, delusional. https://www.thelancet.com/journals/lanplh/article/PIIS2542-5... > 8·52% were cold-related and 0·91% were heat-related [...] Eastern Europe had the highest heat-related excess death rate and Sub-Saharan Africa had the highest cold-related excess death rate. Or look here and show me the disasters we're likely to have: https://www.ipcc.ch/sr15/chapter/spm/ Cause a see a bunch of "not good", but I someh…

> https://www.ipcc.ch/sr15/chapter/spm/ You're linking the 1.5 degrees warming report, which is already known to be an impossible target, the warming we'll reach if we stop carbon emissions completely by 2050; 2 degrees is the new target. We are nowhere near to being on track for such a goal, so you should actually look at the 3+ degrees predictions. I should admit that I was somewhat wrong to bring up droughts - the…

I personally dislike replies like "you didn't even read my comment" because, let's be honest, I don't always read very carefully the comments I'm replying to. But I do have to quote my comment above :)

> But putting numbers makes your position vulnerable - because on one hand global warming does have some good effects, and also wealth and tech more than compensate the ill-effects. For example you may find numbers on extreme weather increasing - but if you look at people affected by it, it's steadily going down.

I really doubt you can find numbers of people suffering more than 20 years ago. You might be tempted to say that it isn't fair, that the developing countries are a lot less poor now - a lot less starving children in Africa, China is middle class and so on. Which is exactly the point - industrialization is more than compensating for anthropogenic changes, and it keeps doing that at an accelerated rate. I don't think raising ocean level is a good thing, but I do have to point out that Netherlands is dealing with sea level a lot better than West Africa would - and in another 50 years West Africa should be where Netherlands is now.

Anyways, I'm not against limiting climate change. I am very much against knee-jerk reactions like the OP, because they do real harm. Post-Covid Europe went ahead and pushed climate legislation, ignoring the pandemic and the economic crisis that was already peeking from around the corner. They cut a lot of slack from the system, and the next shock sent energy prices and inflation soaring.

A more informed and balanced policy would have prevented that. But comments that call an opposing view as "delusional" aren't really helping on the informed and balanced front.

Re: Mild autumn weather has sent European gas prices plummeting

#117

Post by pcrh »

photochemsyn wrote: post #50

One major theme in the ongoing US-Russia conflict over the past decade-plus (dating back to at least 2008) is a fight over who gets to sell oil and gas to Europe. With the destruction of the Nordstream pipelines, and with countries like Qatar refusing to alter long-term energy contracts to increase supplies to Europe, and with Iran still under the Trump-era sanctions (which Biden continued), that mostly leaves the US…

Is the difference in price between Europe and the US down to shipping costs?

Re: Mild autumn weather has sent European gas prices plummeting

#118

Post by sidewndr46 »

sph wrote: post #113
Am4TIfIsER0ppos wrote: post #86

Earlier quoted context omitted.

The market is unable to function normally because of government interference. I expect there is a supplier and a contract somewhere that will give you the spot price. Furthermore the temperature has dropped so I expect demand has increased again so are you really sure you want that contract?

I am ambivalent on the idea of a completely free market. Because while I believe it would self-regulate, in a vacuum (or anarchic system), a free market paired with a government means interference, nepotism, laws that favour monopolies and kills competition. So when people like Liz Truss enter 10 Downing Street and claim they want to enact "free market policies", the result is just utter economic upheaval and chaos t…

Business people and political leaders in the West are almost universally in favor of the free market. Until it turns out that said free market might mean they get the short end of the stick. That is to say less tax revenue or less profit. When that happens they suddenly insist there must be some of government intervention, otherwise they are too big to fail.

Re: Mild autumn weather has sent European gas prices plummeting

#119

Post by DocTomoe »

schlepper wrote: post #27
DocTomoe wrote: post #23

Unfortunately, that does not translate to lower customer-end prices.

Which makes sense given that gas storages have been filled almost to full capacity over the past weeks/months for prices much higher than they are now.

Which would be a good argument if back in the day, when gas storages were filled cheaply in summer, that price would be given over to end customers in winter as well. But of course, that was not the way things went.

Re: Mild autumn weather has sent European gas prices plummeting

#120

Post by acdha »

sph wrote: post #113
Am4TIfIsER0ppos wrote: post #86

Earlier quoted context omitted.

The market is unable to function normally because of government interference. I expect there is a supplier and a contract somewhere that will give you the spot price. Furthermore the temperature has dropped so I expect demand has increased again so are you really sure you want that contract?

I am ambivalent on the idea of a completely free market. Because while I believe it would self-regulate, in a vacuum (or anarchic system), a free market paired with a government means interference, nepotism, laws that favour monopolies and kills competition. So when people like Liz Truss enter 10 Downing Street and claim they want to enact "free market policies", the result is just utter economic upheaval and chaos t…

Monopolies and collusion happen without government regulation, too. I find it best to think of markets as something which are free in the same sense that a helicopter is not currently crashing into the ground.
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