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BuyingBear

Gas Increase - A Real Problem

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Higher again on Monday, it has gone from 36p a therm to north of 130p in just two weeks, most of our electricity is generated in gas fired stations so this is having further knock on effects on power costs.

When you lose control of your own energy supplies funny thing start to happen, there is gas out there in Europe but for whatever reason the market isn't working. We've gone from being an energy island to having the highest gas prices in the world, all in the matter of months, seemingly out of the blue. It seems our planners have been asleep at the wheel by endlessly deferring problems that need addressing when it comes to our energy supplies, hence they're now panicking as demonstrated by all the spinning we witnessed yesterday on nuclear power, a new reactor in 2020 doesn't change the fact that gas is 130p a therm today!

Now the consumer is having a rest we're meant to rely on industry and capital expenditure to thrust the economy forward, yippie, this is no doubt helped by industrial production being scaled down due to an energy crunch. Brown's corporation tax spree is a sign of weakness, it means companies can't see anything decent to invest in and are returning cash. If only Brown's neo-Keynesianism went more on relieving our crumbling infrastructure than recruiting endless heritage wardens.

Anyone whose seen Madonna latest music video will no doubt agree that all this 70's retro is going too far!

Edited by BuyingBear

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This is the thing people just don't seem to understand about the energy situation. This is what many thinking people have feared for years and yet the best the politicians, public and so on can do is ignore or, worse still, ridicule them.

And then it happens. Oil or gas production peaks or generation falls short and in a relatively short period of time life goes from normal to chaotic. The economic effects of this WILL be serious.

It will be much the same with oil when the time comes. Supply falls but demand doesn't so the price just keeps going up.

There is no quick fix. As many have long noted, the time to address this problem was in the 1980's and 90's rather than wasting time on privatisation and "competition". It is a fact that if the UK had stuck to centralised nuclear and coal-fired generation as it had until the 1980's then this situation would not have arisen. That is a fact. Privatisation and the associated dash for gas are the direct cause of this crisis and this is quite properly regarded as a cost of "competition" in the power industry.

The ONLY long term solution is to push ahead as rapidly as possible with the developmet of nuclear, coal and renewable power generation. All three have a role to play and there is no point pretending otherwise. The issue is urgent and if the government is serious about solving the longer term problems then a start to physical site works by Christmas is in order.

In the short term, getting the gas-fired power plants running on oil would offer some temporary (though still very expensive) relief from the situation. It's not a long term solution though and is simply the same thing as the other countries with failed privatisation / dash-for-gas electricity are doing. Better than nothing though.

Edited by Smurf1976

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I give up.

What is it with our "Leaders", if "ordinary" folk, albeit some very clued up and possibly in the industry, can analyse and discuss this issue and forsee the frightening possibilities ahead, yet they, at least to me, seem to let problems hit them in the eye before even thinking about them.

What do WE pay them for?

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I give up.

What is it with our "Leaders", if "ordinary" folk, albeit some very clued up and possibly in the industry, can analyse and discuss this issue and forsee the frightening possibilities ahead, yet they, at least to me, seem to let problems hit them in the eye before even thinking about them.

What do WE pay them for?

I see it as a disfunctional element of democracy. Nuclear power is very unpopular amongst the general public and no party will risk an election by suggesting we need more.

I suspect though that if/ when the lights go out, nuclear power will suddenly become rather more popular. Trouble is, by that time it's too late.

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I see it as a disfunctional element of democracy. Nuclear power is very unpopular amongst the general public and no party will risk an election by suggesting we need more.

I suspect though that if/ when the lights go out, nuclear power will suddenly become rather more popular. Trouble is, by that time it's too late.

Its looking like serious HPC number 3 since the 50's is going to be caused by the same ingredient again: energy costs. How anyone in their right mind can have confidence in house prices just flattening out defies all reason.

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The ONLY long term solution is to push ahead as rapidly as possible with the developmet of nuclear, coal and renewable power generation. All three have a role to play and there is no point pretending otherwise. The issue is urgent and if the government is serious about solving the longer term problems then a start to physical site works by Christmas is in order.
Don't forget conservation, it wouldn't be too hard to knock the best part of 10GW of our electricity consumption within a few years, certainly within step with the nuclear decommission schedule. From where we are now it's faster and cheaper to reduce demand by 1GW than build another 1GW of plant.

I give up.

What is it with our "Leaders", if "ordinary" folk, albeit some very clued up and possibly in the industry, can analyse and discuss this issue and forsee the frightening possibilities ahead, yet they, at least to me, seem to let problems hit them in the eye before even thinking about them.

What do WE pay them for?

Isn’t that the truth, I only really started looking at the DTI, Ofgem and National Grid publications in the last couple of years but this gas crisis has been clear as day to me after the first couple of hours analysis. How armies of civil servants couldn’t see it (I don’t believe they haven’t seen it) and not acted is incredible. I’ve spoken to a couple of MPs at length over the issue over the last 6 months and written to several others. The replies have on the most part been hopeless and the reactionary approach from government this week is a joke. Some times I do just despair at the incompetence shown.

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As a scientist I have always despaired at the political and sheeple fear of nuclear energy generation, it is similar to the fear of GM products...irrational and emotive. A lot more people die from conventional industrial polution thanever have from nuclear polution, and with global warming it will only get worse.

I think this next week could see our first 'energy crisis' since the 70s as we are going to have temps barely rising above 0 from Friday onwards (there may be a brief restbite on Sunday, but the cold will return early next week). Looking at the long term synoptic charts, we could be in for some serious cold weather for a long time...at least a couple of weeks, if not months due to a blocking high. It is conceivable that factories will close, and even talk of staggered working hours for high energy consuming businesses. This could precipitate a pre-christmas exodus from the pound and UK equity markets if it is severe enough.

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I think this next week could see our first 'energy crisis' since the 70s as we are going to have temps barely rising above 0 from Friday onwards (there may be a brief restbite on Sunday, but the cold will return early next week). Looking at the long term synoptic charts, we could be in for some serious cold weather for a long time...at least a couple of weeks, if not months due to a blocking high.

Met office, says two weeks of cold weather, but then turning milder. Anything more than two weeks is wet finger in the air time though ! I'll wager Xmas will be wet and mild again.

As for the price of gas - isn't this just a short term issue for this winter, I'm sure I read this somewhere. Not underestimating though what 4 months of high gas prices would do to the short run for the economy, ceratinly p!ss people off.

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It is conceivable that factories will close, and even talk of staggered working hours for high energy consuming businesses.

I think it's certain factories will close. I just received an email today from someone who's had to lay off people due to the gas price.

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Don't forget conservation, it wouldn't be too hard to knock the best part of 10GW of our electricity consumption within a few years, certainly within step with the nuclear decommission schedule. From where we are now it's faster and cheaper to reduce demand by 1GW than build another 1GW of plant.

Agreed very strongly about the need for conservation. No argument from me there!

However, there is a need to get rid of oil-fired generation altogether in a matter of a few years at most (not that hard since there isn't much of it) but also to get right out of gas by, at the latest, 20 to 25 years from now about which time gas supplies are expected to be approaching peak worldwide. After that the imports will get VERY expensive and quite likely unreliable. It would be desirable to be as economically free of both oil and gas for all purposes by that time. Not practical but desirable.

Realistically, it is likely that geothermal source electric heat pumps (supplemented by electric resistance heating) will substantially replace gas in the provision of space heating and hot water and that to some extent industrial process heating will also switch to electricity particularly where induction heating is practical. This represents an enormous shift in demand away from gas in favour of electricty.

I certainly wouldn't be surprised to see demand for all forms of energy drop in the short term. But over the medium to longer term I think it will be a massive achievement in conservation to just hold electricity demand flat against the switch away from other fuels in favour of electricity. Realistically, demand will rise.

So, I think that total energy demand can certainly be reduced and most likely will be. But I'm not so sure about electricity demand apart from likely falls in the short term.

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Can't remember which site I read this but this quote caught my eye:

UK Gas storage = 11 days

Other European Countries - Minimum capacity 55 days!

Explains why they can play with UK Gas prices on the markets - damaging whatever economy we have left!

Just stinks of Government incompetence - heads should roll over this!

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Met office, says two weeks of cold weather, but then turning milder. Anything more than two weeks is wet finger in the air time though ! I'll wager Xmas will be wet and mild again.

Agreed, although the weather setup we have now is the same as that which we had in March, and indeed for much of the year since. There will be the occasoinal wet and mild spell, and of course one will coincide with Xmas, but this really could be the kind of winter we used to have back in the eighties when you would have three or four snowfalls of 4-6 inches with weeks of very cold dry weather between. Our weather hasn't been truly westerly for nearly a year now (except October) and that really does bode well for snow lovers.

I heard that the gas supply issue was only for this winter, but the fact that it could coincide with one of the hardest winters in the past 15 years, and a spending freeze to match, could drive a lot of UK manufacturers to the wall. I hope not as that effects all of us.

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Surge in gas price forces further factory cuts

BRITAIN’S emerging winter fuel problem moved towards crisis yesterday when a second major chemical firm cut production as the price of natural gas soared to extraordinary levels.

Ineos Chlor, a chlorine manufacturer in Runcorn, Cheshire, said that it had cut its output over the weekend and would make further cuts this week. Ineos said that it was shutting the taps as the spot price of gas rose to above £1 per therm yesterday. On Friday Terra Nitrogen said it was turning down production after a doubling of the spot price from 36p to 82p in the space of ten days

http://business.timesonline.co.uk/article/...1882622,00.html

Edited by clv101

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Agreed, although the weather setup we have now is the same as that which we had in March, and indeed for much of the year since. There will be the occasoinal wet and mild spell, and of course one will coincide with Xmas, but this really could be the kind of winter we used to have back in the eighties when you would have three or four snowfalls of 4-6 inches with weeks of very cold dry weather between. Our weather hasn't been truly westerly for nearly a year now (except October) and that really does bode well for snow lovers.

I heard that the gas supply issue was only for this winter, but the fact that it could coincide with one of the hardest winters in the past 15 years, and a spending freeze to match, could drive a lot of UK manufacturers to the wall. I hope not as that effects all of us.

I don't know if you're right about only this winter but if we don't have a harsh winter, gas supplies are ok and prices fall back, we then get the collective sigh of relief from the top down, followed by "oh well put that on the backburner for now".

The issue itself is still there though.

This "hiccup" should be treated as a serious wakeup call.

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...this really could be the kind of winter we used to have back in the eighties when you would have three or four snowfalls of 4-6 inches

Sounds like fun. Any chance of sending some down to Oz? :D

Just think, kids would NEVER forget it snowing on Christmas Day if that could happen here. Wonderful diversion from this silly world we've created.

...

Technical question for anyone that knows.

Do the relevant rules governing the UK gas industry permit ethane, butane and/or propane to be passed through into the sales gas (natural gas) stream?

Normally these are extracted for separate marketing. Ethane is a petrochemicals feedstock whilst butane adn propane are commonly known as LPG. But in some countries it is allowable to pass these through into the sales gas stream to boost volumes. It's done in the US when market conditions warrant it and in Japan LPG is in fact added to imported LNG at fairly high concentrations as part of normal operations.

My reason for asking is to know what effect, if any, this will have on the worldwide markets.

Edited by Smurf1976

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Surge in gas price forces further factory cuts

BRITAIN’S emerging winter fuel problem moved towards crisis yesterday when a second major chemical firm cut production as the price of natural gas soared to extraordinary levels.

Ineos Chlor, a chlorine manufacturer in Runcorn, Cheshire, said that it had cut its output over the weekend and would make further cuts this week. Ineos said that it was shutting the taps as the spot price of gas rose to above £1 per therm yesterday. On Friday Terra Nitrogen said it was turning down production after a doubling of the spot price from 36p to 82p in the space of ten days

http://business.timesonline.co.uk/article/...1882622,00.html

I am missing something here. What has happened to the concept of forward contracts?

If a company as dependent on continuity of natural gas supply as a chlorine manufacturer is cutting production because of a change in the spot price, then why hasn't the board already summarily sacked the Managing Director for gross incompetence?

Or could we have a situation similar to the aluminium smelters in North-West USA during the California electricity crisis a few years back, where the smelters made more profit re-selling their long-term contract electicity on the spot market than using it to produce aluminium. Shame about the workers at the smelters but hey, gotta look after the shareholders first.

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Surge in gas price forces further factory cuts

BRITAIN’S emerging winter fuel problem moved towards crisis yesterday when a second major chemical firm cut production as the price of natural gas soared to extraordinary levels.

Ineos Chlor, a chlorine manufacturer in Runcorn, Cheshire, said that it had cut its output over the weekend and would make further cuts this week. Ineos said that it was shutting the taps as the spot price of gas rose to above £1 per therm yesterday. On Friday Terra Nitrogen said it was turning down production after a doubling of the spot price from 36p to 82p in the space of ten days

http://business.timesonline.co.uk/article/...1882622,00.html

I'm not sure if this is related or not, but for a few weeks I worked at a coal powered power station.

They had to have regular supplies of ferric chloride and something else from Ineos Chlor. I'm assuming these will be affected by Ineos closing production.

So, not only will gas shortages affect the gas fired power stations, it might well then affect the coal fired power stations and slow them down too. Now that would certainly set the cat among the pigeons.

Does anyone know anymore about this ?

Looks like nuclear power is going to the top of the buy list ....... unless the Iranians object of course !

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I spoke to a successful experienced landlord, with several properties he bought over 10 year ago in the Merseyside area.

Despite historically disgreeing with my increasingly bearish views, a month ago he told me that he was going to sell all his properties due to the increase in energy costs.

He thought some small interest rises could be weathered, but rising energy costs were the final straw. I sensed the air of panic in him. He was in his late 40's, so maybe he remembered the 70's .

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I am missing something here. What has happened to the concept of forward contracts?

If a company as dependent on continuity of natural gas supply as a chlorine manufacturer is cutting production because of a change in the spot price, then why hasn't the board already summarily sacked the Managing Director for gross incompetence?

Or could we have a situation similar to the aluminium smelters in North-West USA during the California electricity crisis a few years back, where the smelters made more profit re-selling their long-term contract electicity on the spot market than using it to produce aluminium. Shame about the workers at the smelters but hey, gotta look after the shareholders first.

many manufacturers in the ceramics sector( clay bricks, tiles) used to be on 12 /24 month forward contracts. however, when they ran out many were not prepared to lock in to deals at what seemed at the time were rip off prices. they adopted a strategy to sit and wait by buying on a weekly. monthly basis.

obviously they have caught a cold due to the speculative steep increases.

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What about the knock-on effect on shop prices for everything we buy?

More commodity inflation after xmas?

Much higher Council Tax Rises to pay for massive increase in cost of Street lighting, Heating/lighting for millions of Public Servants!

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Much higher Council Tax Rises to pay for massive increase in cost of Street lighting, Heating/lighting for millions of Public Servants!

I'm sure that those millions of 'public servants' can generate more than enough hot air to avoid freezing this winter :).

I see it as a disfunctional element of democracy. Nuclear power is very unpopular amongst the general public and no party will risk an election by suggesting we need more.

Indeed. This whole problem is largely due to the huge and fundamental flaws of mass democracy... few politicians think past the next election, and even fewer are willing to make unpopular decisions.

Just another reason why China is likely to overtake the West before long.

Edited by MarkG

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Guest Bart of Darkness

I see it as a disfunctional element of democracy. Nuclear power is very unpopular amongst the general public and no party will risk an election by suggesting we need more.

I suspect though that if/ when the lights go out, nuclear power will suddenly become rather more popular. Trouble is, by that time it's too late.

Spot on BG. Looks like the French had the right idea after all.

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I am told that over 25% of our total expenditure at work is currently on energy (mostly old listed buildings) but when an opportunity to build a new eco friendly energy efficient building came up...we flunked it. Currently installing a huge gas burning boiler when the need could be met by a heat pump at less than half the cost. I think that like our backward speculative house builders most people are unwilling to try 'new' (or in reality wellproven but foreign) technologies.

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Didn't our government sell off a nuclear company recently? I can't remember much about this, I know there was alot of controversy (as nuclear fuel was/is the future), anyone know any more?

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • up 5%



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