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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

#181

Post by algoatecorn »

guerrilla wrote: post #175
algoatecorn wrote: post #138

Earlier quoted context omitted.

Yep, I have friends who think the price at the pump is due to companies like Exxon and their "ability to price gouge". Like what? Yea dude Exxon is so powerful they let their stock freefall for 6 straight years post-2014

Your friend is right. They literally have record-breaking income right now[1]. It just headlined the FT two days ago. This is also happening with distributors/utilities. 1. https://www.ft.com/content/0d84255c-84ba-4462-b80a-859335285...

That doesn't mean they are right. This is a complex topic that I don't have time to write a thesis on at the moment. Some things to consider: cost cutting 2014-2019 enabled much higher profits when demand went through the roof, alternatives and substitutes, how is the price of OIL determined?, spot vs future, refinery capacity, how much of oil -> gasoline is vertically integrated, who oil producers sell to, who buys the oil, who distills it.

So who's doing the price gouging? Oil producers? Distillers? Gas stations? Everyone?

Are prices being gouged, or are there intricacies in this system which have compounding price effects on supply and demand hiccups?

Re: Mild autumn weather has sent European gas prices plummeting

#182

Post by somedude895 »

kristo wrote: post #165

Don't discount the fact that many europeans are actively trying to conserve and refuse to heat their house until absolutely necessary. I have 65 yr old friends in amsterdam taking spongebaths because they don't want to support russia

Is that just an anecdote though?

In Switzerland the govt has been running an energy conservation awareness campaign for about 6 weeks now and the stats say it's had zero effect so far.

Re: Mild autumn weather has sent European gas prices plummeting

#183

Post by coldpie »

bombcar wrote: post #135
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…

Isn't storage just exactly the problem? From what I understand every single possible storage tank in Europe is filled to the brim, and most if not all of the LNG ships are already there or en-route.

I got some plastic bags hanging around, who do I ring to get in on this?

Re: Mild autumn weather has sent European gas prices plummeting

#184

Post by gruez »

jimnotgym wrote: post #177
bombcar wrote: post #135

Earlier quoted context omitted.

Isn't storage just exactly the problem? From what I understand every single possible storage tank in Europe is filled to the brim, and most if not all of the LNG ships are already there or en-route.

Liz Truss, the short lived prime minister of the UK closed a major gas storage facility when she was energy secretary!

I don't think this is correct. According to the coverage I've read, the facility in question is Rough[1] which closed in 2017. Around that time Truss was "Secretary of State for Justice" and "Secretary of State for Environment, Food and Rural Affairs". In case the latter sounds vaguely energy related, there's a separate cabinet post called "Secretary of State for Business, Energy and Industrial Strategy".

[1] https://en.wikipedia.org/wiki/Rough_(facility)

Re: Mild autumn weather has sent European gas prices plummeting

#185

Post by collegeburner »

m000 wrote: post #62

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

"price gouging is when futures contango" ok buddy. there's literally an energy provider here that will more or less give you spot. and guess what, a whole bunch of people got burned doing that. the issue is there's a glut right now, go look at the futures curve going into winter then get back to me.

Re: Mild autumn weather has sent European gas prices plummeting

#186

Post by TremendousJudge »

sharikous wrote: post #179
GaylordTuring wrote: post #173

> Before Russia invaded Ukraine, it provided close to 40% of Europe’s gas. I’ve never understood why people say things like this when referring to the operations started in 2022. Wasn’t what they did in Crimea in 2014 an invasion?

You are perfectly right. And yet the swiftness of that move made that a fait accompli pretty quickly so people forget that. A better line would be "before the 2022 invasion ..."

It's probably what the Russian government expected this time around as well -- if they had taken Ukraine in less than a week (as they apparently expected to), the negative European reaction probably wouldn't have happened, same as in 2014.

Re: Mild autumn weather has sent European gas prices plummeting

#187

Post by guerrilla »

algoatecorn wrote: post #181
guerrilla wrote: post #175

Earlier quoted context omitted.

Your friend is right. They literally have record-breaking income right now[1]. It just headlined the FT two days ago. This is also happening with distributors/utilities. 1. https://www.ft.com/content/0d84255c-84ba-4462-b80a-859335285...

That doesn't mean they are right. This is a complex topic that I don't have time to write a thesis on at the moment. Some things to consider: cost cutting 2014-2019 enabled much higher profits when demand went through the roof, alternatives and substitutes, how is the price of OIL determined?, spot vs future, refinery capacity, how much of oil -> gasoline is vertically integrated, who oil producers sell to, who buys…

> So who's doing the price gouging? Oil producers? Distillers? Gas stations? Everyone?

Yes, the entire supply chain, at least in my country. It's been news for quite a while.

> Are prices being gouged,

Yes and there's a lot of talk of intervention for that reason, even in the US.

Re: Mild autumn weather has sent European gas prices plummeting

#188

Post by thorin »

bombcar wrote: post #135
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…

Isn't storage just exactly the problem? From what I understand every single possible storage tank in Europe is filled to the brim, and most if not all of the LNG ships are already there or en-route.

I wrote the system for National Grid UK LNG storage and trading in the early 2000s. I think they had 6 sites online now. Milford Haven was in progress I believe. Then they gradually started closing them as not required... Same with coal and nuclear plants! LNG is not so easy to store and there were a lot of safety regulations for site visits.

Re: Mild autumn weather has sent European gas prices plummeting

#189

Post by netrus »

guerrilla wrote: post #174
netrus wrote: post #133

Earlier quoted context omitted.

The argument is that it is obviously never easy to make money in a transparent market - because SOMEONE with money would do it until the prices adapt. The difference between todays spot market and futures tells you something about the challenge to provide additional storage at scale.

> because SOMEONE with money would do it until the prices adapt But they are. Your premise is wrong. This just headlined the Financial times 2 days ago[1]. This and the last quarter have been record profits for energy companies and that's not even counting local profits, which are also at record heights. 1. https://www.ft.com/content/0d84255c-84ba-4462-b80a-859335285...

Well of course they makes record profits, something they have increased in value (storage, stock, permits...) But they cannot buy more gas now and sell in the future than they already do - as we can see from the prices.

Re: Mild autumn weather has sent European gas prices plummeting

#190

Post by parkingrift »

Moissanite wrote: post #139
bearmode wrote: post #20

Earlier quoted context omitted.

Could also be a bad thing; if a country's storage capacity is woeful (like the UK), it indicates we could be storing more.

20/20 hindsight. In a less miserable timeline, the absence of hostilities with Russia makes gas storage a non-issue, and any government putting money into gas tanks rather than renewable energy would have been (rightly) lambasted. I'm willing to tear chunks out of our inept leaders over many things, but this isn't one of them.

My friend… Russia invaded Ukraine in 2014. Two different US presidents warned Europe about Russian energy dependency, publicly. Who knows how many times this was brought up in private conversations.

This was so easy to predict that even Donald Trump managed to put two and two together and make four. He brought it up, publicly, and German leaders literally laughed at his face.

European politicians deserve no benefit of the doubt here after 2014. They were told this was a huge risk and chose to do nothing.

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