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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

#151

Post by nurblieh »

krobbn wrote: post #130

"Gas costs €35 per mwh for delivery today, but €110 for a guaranteed shipment in December and €142 for one in February, once heaters turn on." The market is in contago, if you can find a way to store the gas you can make money buying today and delivering in Dec/Jan/Feb. You could even take delivery in December if you can find storage and sell in Feb and lock in a spread of $32 today. This is the reason you're seeing…

Contango! Great word. For a fun explanation, check out Planet Money’s “Negative Oil”, https://www.npr.org/2020/04/22/842095406/episode-993-negativ... .

Re: Mild autumn weather has sent European gas prices plummeting

#152

Post by pasquinelli »

AbrahamParangi wrote: post #126
m000 wrote: post #110

Earlier quoted context omitted.

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's because if a company makes too much profit, it's being potentially inefficient - but if it makes too little profit, it goes out of business.

okay, but that excess profit is consumers' money and workers' time, so of course ordinary people are pissed.

Re: Mild autumn weather has sent European gas prices plummeting

#153

Post by nyokodo »

Workaccount2 wrote: post #136
ericmay wrote: post #106

Earlier quoted context omitted.

Not really. If Russia wanted to continue to sell gas to Europe it could end the war against Ukraine (or have never started it in the first place). Gas sales aren’t a high priority there. Putin doesn’t care one bit about those, and likely had the pipeline blown up as a “no way back” for those who might have wanted to negotiate behind his back. The US blowing up NS2 for a few billion dollars worth of gas sales is beyon…

Ukraine recently discovered it had large reserves of natural gas. Enough that it could potentially threaten Russia as Europe's main supplier. Many people suspect this was the primary reason Russia invaded.

> Many people suspect this was the primary reason Russia invaded.

Regional energy control was possibly a factor but securing a defensible border was the over-arching goal of Russia’s last few wars in the region and Ukraine is no exception. Ukraine has the Carpathian Mountains, and allows access to Poland and Moldova to secure the Polish and Bessarabian gaps.

Re: Mild autumn weather has sent European gas prices plummeting

#154

Post by pasquinelli »

acdha wrote: post #120
sph wrote: post #113

Earlier quoted context omitted.

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.

a free market is a mathematical model, which is a nice way of saying it's an imaginary thing.

Re: Mild autumn weather has sent European gas prices plummeting

#155

Post by petercooper »

sgt101 wrote: post #150
TheLoafOfBread wrote: post #99

Earlier quoted context omitted.

In UK it is completely self inflicted, because they got rid of gas storage infrastructure in 2017 https://www.theguardian.com/business/2017/jun/20/uk-gas-stor...

This has reopened (25%) and is excluded from the economist's figures. In fact some research [1] shows that approximately 93 days of supply will be stored in the Rough gas facility at 25% (28Bcf {capacity}/313Mcf {daily}). This is inadequate (of course) and has probably not been filled yet, but should be helpful to the UK if it can be properly commissioned. [1] https://www.costadvice.co.uk/latest-news/will-the-reopeni…

And yet when the news did the rounds about Rough recently, they kept mentioning a 50% figure. For example: "Centrica has officially reopened the Rough gas storage facility, increasing the UK's storage capacity by 50%."

When I saw this, I was thinking an increase of 50% on a week's worth of storage?

Re: Mild autumn weather has sent European gas prices plummeting

#156

Post by sgu999 »

eecc wrote: post #48
dtech wrote: post #26

Earlier quoted context omitted.

Can you expand on this or provide sources? At least in my countries the gas storage is now-empty gas fields that used to contain natural gas anyway, I have a hard time seeing how that could contaminate water sources.

The mild weather after a scorching summer is turning the continent into a desert. Without an exceptionally wet and cold winter the European water basins will be toast next year. The italian Pianura Padana has seen one of the worst droughts in centuries.

> Without an exceptionally wet and cold winter the European water basins will be toast next year.

What do you mean by toast? Is there some kind of ratchet effect that ruins the water storage capacity for a very long term?

Re: Mild autumn weather has sent European gas prices plummeting

#157

Post by [deleted] »

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.

[deleted]

Re: Mild autumn weather has sent European gas prices plummeting

#158

Post by _glass »

krobbn wrote: post #130

"Gas costs €35 per mwh for delivery today, but €110 for a guaranteed shipment in December and €142 for one in February, once heaters turn on." The market is in contago, if you can find a way to store the gas you can make money buying today and delivering in Dec/Jan/Feb. You could even take delivery in December if you can find storage and sell in Feb and lock in a spread of $32 today. This is the reason you're seeing…

Or you can use a financial instrument futures. I never bought futures, just learned about it in university. But there you agree to a future price, so akin to storing it.

Re: Mild autumn weather has sent European gas prices plummeting

#159

Post by vkou »

andrepd wrote: post #149
woah wrote: post #123

Earlier quoted context omitted.

These oil and gas futures are all publicly traded, as are most of the corporations working in the field. If it’s really so easy to make money because the market is rigged, guess what? You can get in on the action too.

Sure, let me just get a couple hundred million in capital, I'll be there in a minute. If people are complaining that something is wrong, the answer isn't "well why don't you take advantage too"

I assure you, there are plenty of people with a few hundred million they are looking to invest who aren't in on the Big Gas conspiracy!

Yet, most of them don't seem to be tripping over themselves to collect this free money. It could be because:

* The market has priced in the cost of storing all this gas between now and February.

* Storage is expensive, and is at capacity.

* Building out new storage that only will be useful for a total of two years (Or however long you expect the war to last) is a poor investment.

* An increase in storage capacity will lower the spread between the spot price of gas in October and the price of gas in February, as suppliers price in the increase/reduction in demand

* Europe transitioning to electric (heat pump, baseboard, etc) heating will lower demand for gas.

There's a reason that difference in spot pricing exists.

Re: Mild autumn weather has sent European gas prices plummeting

#160

Post by [deleted] »

_glass wrote: post #158
krobbn wrote: post #130

"Gas costs €35 per mwh for delivery today, but €110 for a guaranteed shipment in December and €142 for one in February, once heaters turn on." The market is in contago, if you can find a way to store the gas you can make money buying today and delivering in Dec/Jan/Feb. You could even take delivery in December if you can find storage and sell in Feb and lock in a spread of $32 today. This is the reason you're seeing…

Or you can use a financial instrument futures. I never bought futures, just learned about it in university. But there you agree to a future price, so akin to storing it.

[deleted]
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