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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

#241

Post by shapefrog »

oezi wrote: post #230
shapefrog wrote: post #191

Earlier quoted context omitted.

Rounded to the nearest meaningful number 0.00 cubic feet of gas was going to flow through those pipes in the foreseeable future. Blowing them up did everyone, on both sides, a lot of favours by ending the whole will they / wont they charade that was taking place on both sides.

I never understood the Northstream strategy on all sides before the war and I don't understand the reasoning for blowing it up either. For Russia to blow up its own pipeline takes away their ability to offer gas in exchange for money and political influence regarding the Ukraine conflict. Why should they want to give up this bargaining chip they worked hard for the last 20 years? The only reason I can think of is tha…

Both sides are holding it as a bargaining chip while simultaneously having it held over them as a bargaining chip. Neither side now wants to transact on the pipeline as it will ultimately be a sign of weakness. Either Europe blinks because it is desperate for gas or Russia blinks because it is desperate for money - and neither side is going to blink.

All the while Europe hasnt found it that hard to find other sources of gas and Russia hasnt found it too hard to find buyers willing to get a discount.

Re: Mild autumn weather has sent European gas prices plummeting

#242

Post by actionfromafar »

MomoXenosaga wrote: post #204
actionfromafar wrote: post #109

Earlier quoted context omitted.

My money is on Putin doing it, to dissuade any would be throne-pretenders in case of a coup. Any new government has fewer funding options, which would be good to negotiate with Europe, and to pay cooperating oligarchs. It would be cutting the nose to spite the face, except Putin is cutting Russia's nose, not his own. What matters is staying in power, not the good of the nation.

I agree. Scorched earth policy. Putin for whatever reason is going all in on Ukraine. Even if the war ended tomorrow it would take Russia decades to rebuild it's army.

To rebuild to its previous apparent capability or to its actual capabilities?

If Russia is given the means, it may take only a few years to rebuild to its actual capabilities of 2021. Which is bad enough to cause trouble.

Re: Mild autumn weather has sent European gas prices plummeting

#243

Post by hackandthink »

vkou wrote: post #217
hackandthink wrote: post #211

Earlier quoted context omitted.

"There are red lines that you can't cross, and open conflict with a nuclear adversary is one of the latter." This is true for NATO powers as well. I can't believe Russia blew it up, it doesn't make sense. But which NATO Country would blow up pipelines and risk a conflict with a nuclear adversary?

It can make sense if you think about it in the game theory manner. Sometimes, deliberately limiting your options improves your overall outcome. One theory is that by blowing up the pipeline, Putin is limiting Russia's options. With the pipeline in place, ending the war would immediately cause the flow of gas, and dollars into Russia to resume. Without the pipeline, ending the war would not cause the flow of gas and d…

OK, this is at least a theory:

Putin wants to continue the war. He takes away his possibility of selling gas to Western Europe so that he is not tempted to make peace and sell gas. And his fellows can not be tempted as well.

(sounds as crazy as everything else)

Re: Mild autumn weather has sent European gas prices plummeting

#244

Post by nyokodo »

ericmay wrote: post #178
nyokodo wrote: post #153

Earlier quoted context omitted.

> 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.

Securing the borders from what? If he was worried about NATO he would be beefing up troop deployments along the borders of Lithuania, Latvia, and Estonia where he has withdrawn troops and he wouldn't have his military completely bogged down in Ukraine. Why would Russia need to secure borders anyway? Who is going to invade on foot? They have nuclear weapons and would have a justifiable reason in using them if they wer…

> Securing the borders from what?

Russia has been invaded by land countless times over the centuries as it has few natural barriers. Securing good natural borders has been a major national security concern for Russia for centuries and up until the fall of Soviet Union they had secured all of them. They have been winning those back gradually over the last couple of decades.

> If he was worried about NATO he would be beefing up troop deployments along the borders of Lithuania, Latvia, and Estonia where he has withdrawn troops

The Baltic states are likely future targets. Thankfully they've been doing so badly in Ukraine they are being forced to withdraw forces from other areas and debasing their ability to achieve those future aims.

> They have nuclear weapons and would have a justifiable reason in using them if they were wantonly invaded

Firstly, there are numerous scenarios where Russia is not wantonly invaded but perhaps different powers use salami tactics either directly or by proxy that wouldn't justify nukes at any particular point. Secondly, Russia may not want to rely on its ability to maintain nuclear weapons long-term especially while its industrial base decays, the result of its crumbling education system unravels, and its demographics rapidly decline. Regardless, it's much better strategically to have good defensive geography and nukes.

> It seems so many want to run away from the straightforward situation...Everything else is a sideshow at best, and Russian propaganda at worst.

The idea that Russia wants a secure border geography and that Ukraine is a barrier to that is not new nor controversial. The (continued) invasion of Ukraine was long expected and the high level reasons long known.[1][2]

1. https://www.theatlantic.com/international/archive/2015/10/ru... 2. https://zeihan.com/russias-twilight-war/

Re: Mild autumn weather has sent European gas prices plummeting

#245

Post by parkingrift »

oezi wrote: post #231
parkingrift wrote: post #190

Earlier quoted context omitted.

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 o…

Germany gets a lot of flak for buying Russian gas cheaply the last 30 years in ever increasing volumes. But it seems strange to argue that Germany just should have bought gas from Qatar or the US for double the price from the start. How should Germany have done that? Import tax on Russian gas? Laws preventing importing cheap gas from the east? Sounds a bit aggressive towards our big neighbor to the east. Germans mayb…

>But it seems strange to argue that Germany just should have bought gas from Qatar or the US for double the price from the start.

That was never on the table. The US doesn’t even have the export capacity to manage it.

Germany should have pursued energy independence for the the European Union. It’s as simple as that.

Re: Mild autumn weather has sent European gas prices plummeting

#246

Post by krobbn »

dirtyid wrote: post #229
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…

I assume those LNG tankers are just hanging around as "storage" waiting for the winter payoff?

Exactly, you're getting paid to store the gas for future delivery.

Re: Mild autumn weather has sent European gas prices plummeting

#247

Post by [deleted] »

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…

[deleted]

Re: Mild autumn weather has sent European gas prices plummeting

#248

Post by vba616 »

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...

There's a Lukoil station near where I live. The price they are charging doesn't differ much from say Exxon/Mobil.

Is that because they are colluding?

Re: Mild autumn weather has sent European gas prices plummeting

#249

Post by vba616 »

pessimizer wrote: post #234
algoatecorn wrote: post #181

Earlier quoted context omitted.

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…

This is just a Gish Gallop. If you're not going to write a thesis, just find a single thing and explain why record profits there aren't actually gouging.

If powerful forces control prices, why do they go down?

I don't believe in the gouging rhetoric because interested parties benefit from not only high prices, but stable prices, which we haven't seen.

Unstable, skyrocketing prices encourage competition from alternative energy sources, right?

I don't think we have to imagine an alternative to the situation in recent years, but can look to history for context.

If you look at any really long term chart of oil prices, there is a dramatic change in the early 00s, from a regime of fairly stable prices to one where they skyrocket and crash.

I think statisticians have a term for this: heteroscedasticity.

It kind of looks as though energy prices were stabilized deliberately, and then those forces lost control. Maybe it was related to fracking, or the invasion of Iraq. Or maybe it was a reaction to newly perceived fragility of the Saudi monarchy. Or maybe it was because Russia became a bigger player not under the control of OPEC. Or the US, similarly.

Re: Mild autumn weather has sent European gas prices plummeting

#250

Post by benj111 »

guerrilla wrote: post #228
benj111 wrote: post #215

Earlier quoted context omitted.

Have you got figures to back up your assertions that the entire supply chain is price gouging? Or is this purely on the basis that you're experiencing high prices so anyone that passes on those price rises are defacto price gouging?

> Have you got figures to back up your assertions that the entire supply chain is price gouging? This a false dichotomy. It's been in the news here pretty much constantly, especially in the financial press, to the point it's common knowledge. I'm neither digging up those articles nor translating them for you though. You'll just have to take my word on it (or not.)

How is it a false dichotomy?

Price gouging would show up on the P&L it's very easy to demonstrate. Citing unnamed newspapers and 'common knowlege' doesn't demonstrate anything, or inspire confidence.

Petrol stations tend not to be very profitable. Not knowing where you are I can't say whether you're the exception. But as petrol is fungible, unless you're accusing them of collusion or something I don't see how they could price gouge.

Same with refineries.

So that just leaves the oil drillers. You have got OPEC and stuff, but the average non opec oil drillers have the choice of selling at the market rate or not at all. And I'm not sure how selling at the market rate, be that for massive profits, or a loss is price gouging. Unless you want to devalue the term.

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