The price quoted is the price on the spot market, but a lot of gas is supplied on long term contracts, and in the UK that is often linked to the current price of oil. The spot market can be very volatile but only a small percentage of the total gas is sold in it.
Global supply of NG is still rising, but so is demand. Piped gas is generally cheaper to produce, but long distance pipes are expensive to build, and cannot cross oceans. Hence most of the new supply is LNG and this requires a lot of infrastructure at both ends, as well as shipping.
UK storage is inadequate but this dates from days when we had ample production and only needed short term storage to cover outages. The negative storage levels where due to the uncertainty of just how much gas was down the hole. This year they have shifted the zero so we won't see that effect again.
Japan is used to much higher gas prices than Europe, USA much lower. Russia used to(and to some extent still does) sell gas much cheaper to Ukraine et al, for political reasons. The US glut is because of the lack of export facilities, these have a long build lead time, and the imbalance between supply and demand is actually quite small, so the glut is likely to evaporate before investors make money back on the LNG they ship. Also US politics makes exports difficult.
The 'market' in the UK can affect both supply and demand - hence the increase in coal burning the last few years, but the strategic balance of power station types varies as a result of politics and long term economics, the politics (or lack of it) leading to an unhealthy second dash for gas on the basis of cheap and quick to build, on the assumption that the customer will pay the market price for importing the LNG as necessary. This works up to the point where we are overwhelmed by debt paying for this imported energy and our economy contracts into recession again.
So it is the usual pedal to the metal over the cliff policy.
France and 'leccy...
Moderator: Peak Moderation
Thanks for that Ralph, so part of our lack of storage is due to the unshakeable religious knowledge that the North Sea, as is all F.F., is infinite and/or a-biotic, it can never decline. However, since it appears that the North Sea went into terminal decline around 15 years ago, why have we not built more storage in the interim? Is this because the North Sea decline is only a short "blip" - technological advances will fix it "soon" - and therefore we will soon be back to ever increasing production, or is it perhaps because TPTB know that F.F. world wide decline is well under way, and spending vast sums on increasing storage is just a waste of time and money.........
The economic case for building storage is that you buy cheap gas in summer when supply exceeds demand, and sell in winter at a profit.
However, our production has now fallen to the point that we are a net importer all year round, and the market price is the LNG global price, and this is not seasonal, because hot countries have maximum demand in summer, not winter. Therefore no profit is possible and no storage is going to be built with private money.
Energy security and preventing power cuts due to inadequate imports being available are political decisions and therefore have been ignored.
However, our production has now fallen to the point that we are a net importer all year round, and the market price is the LNG global price, and this is not seasonal, because hot countries have maximum demand in summer, not winter. Therefore no profit is possible and no storage is going to be built with private money.
Energy security and preventing power cuts due to inadequate imports being available are political decisions and therefore have been ignored.
Scary that we had to practically run out in order to figure out where the Zero was!UK storage is inadequate but this dates from days when we had ample production and only needed short term storage to cover outages. The negative storage levels where due to the uncertainty of just how much gas was down the hole. This year they have shifted the zero so we won't see that effect again.
Engage in geo-engineering. Plant a tree today.
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RenewableCandy
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