Gas supply crunch

[mikepepler]

I think for Putin/Russia this was all about the new pipeline, and now they've made it clear. But even if it came online right away, I guess the low gas storage levels in Europe would mean prices would not come down much? And there are also questions about how much gas Russia actually has spare to export.

[PS_RalphW]

Putin is playing the long game. High gas prices means high (personal) profits for Gazprom - which he controls, but he does not want to kill the golden goose by triggering a major recession/collapse. He will supply just enough gas to keep Western Europe sweet politically. Also he knows the gas is finite. Why sell for $100 today when you can sell for £200 tomorrow? Gas is the hardest fossil fuel to replace.

[clv101]

Gas is the hardest fossil fuel to replace.

Vast majority of gas is used in static applications, electricity and heat - these are easier to replace with renewables or nuclear than oil is.

[emordnilap]

Fossil fuel is - and always has been - too cheap. But we'll pay for it in the future.

[adam2]

Agree, I would like to see the gas price remain higher than the historical norm, though not as high as recently reached.

The UK has one of the best wind power resources in Europe and to be burning gas in power stations, or importing electricity, even in windy weather is daft. In my view, the UK should aim to meet at least 110% of electricity demand from renewables under favourable conditions, export the extra 10%.

We are some way from eliminating natural gas burning for electricity production, but should at least be making a start with more wind power and more PV.

[Stumuz2]

Just heard another angle on the gas price story. Goes something like this.
1/ UK/EU prefer the spot price market, as they are increasing renewables, and get cheaper 'world' prices most of the time.
2/ Putin wants the The EU to be on decades long supply contracts because he sees the rush to renewables (especially the UK) eating his lunch in the future.
3/ Has brought this to a head to pressure the EU into long term contracts.

Makes sense from a Putin viewpoint.

[clv101]

Yeah, that's pretty much what Putin said on Wednesday, see link above.

[adam2]

This is now yesterdays news, but prices remain at about three times the previous record. And at many times the norm for this time of year.

The EU have "unveiled a plan to ease the gas crisis" Not certain that they can do much about world prices. Increased use of renewable energy is mentioned, that would certainly help in the medium to long term but seems unlikely to relieve matters for this winter.

https://www.bbc.co.uk/news/world-europe-58896847

[adam2]

This news article about Russian gas supplies to Europe is interesting.

[flash=]https://www.bbc.co.uk/news/58888451[/flash]

In particular the chart that shows weekly gas flows into Europe for the last two and a bit years. This shows seasonal variation as one might expect, but seems to also show a relatively modest general decline. This to me suggests depletion rather than political policy.
In particular, the first week in October is highlighted, the flow this year is less than the same week last year, but only moderately, and last years figure is a bit less than the year before that.

Presuming that the figures are reliable, then it looks like a fairly steady depletion rate, upon which are superimposed both seasonal variations and random fluctuations.

[Potemkin Villager]

So how is "high demand" pushing up prices?

There is something very dodgy at the root of all this
and I suspect it has more to do with speculation than
actual supply and demand.

[adam2]

In a free market economy, increased demand tends to increase prices, as does reduced supply.
Demand for gas has increased due to a growing population, higher living standards and a move away from coal and towards gas for electricity generation.
The pandemic resulted in a short term drop in demand, which has now rebounded.

I expect that natural gas prices will fluctuate, but remain higher than in the recent past.

I consider a higher gas price to be a good thing within reason as alternatives are thereby encouraged and carbon emissions reduced.

[Potemkin Villager]

Yes but if the flow of Russian gas into Europe is slowly reducing
it suggests a reduction in demand in Europe (including the UK) and not an increase surely?

Anyway all is saved by the weather as, according to the War Office Gazette :-

" Kwasi Kwarteng has told energy bosses that Britain's mild winter could protect households from rising energy bills.

The Business Secretary this week shared internal long-term forecasts, which showed that the Meteorological Office is expecting a wet and mild winter, with energy companies.

The hope among his officials is that people will not have to turn up their heating and fears of a spike in bills will not come to pass.

The energy price cap – which sets limits on what suppliers can charge customers on default tariffs – went up by £139 this month to push average bills up to £1,277. Analysts think it could go up by another £400 when it is next reviewed in April."

So everything should just be fine and dandy!

[adam2]

Gas consumption in the UK has fallen a little, but imports are on a rising trend as North Sea production declines.
Demand from Asia has increased.

And as for the government forecast of a mild winter, take that as a sign of blizzards to come !

[Catweazle]

Price could be on the way up again

https://www.msn.com/en-gb/money/other/r ... d=msedgntp

[kenneal - lagger]

.................And as for the government forecast of a mild winter, take that as a sign of blizzards to come !

We have an exceptional crop of Hawthorn berries and other hedgerow fruit this autumn and that is usually said to forecast a hard winter although it says more about the previous growing season in reality. I made some hawthorn leather yesterday for the first time in years there were so many berries.