Mild autumn weather has sent European gas prices plummeting

https://www.economist.com/graphic-detail/2022/11/03/mild-autumn-weather-has-sent-european-gas-prices-plummeting

by mfiguiere • 4 years ago

179 258 4 years ago

10u152• 4 years ago

The pictorial had me for a minute. Deeper red means closer to full which is a positive thing.

bearmode2• 4 years ago

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

Moissanite2• 4 years ago

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.

thefz3• 4 years ago

On the other hand, if we could stop considering only the economic aspect of everything and see that the downside of this is that we are destroying our water reserves that took thousands of years to accumulate...

Roark66• 4 years ago

Well, the economic aspect of things is essential just as physical constrains. You can't wish away certain things like availability of other resources, or people behaving responsibly with no economic incentive.

Talking about water reserves. I actually have my own well that I went through the approval and build process about a decade ago(in EU). I had to declare "maximum consumption per day".

So my point is, there is some (at least theoretical) conservation of groundwater resources. However there is no real way to check factual use for which I don't think there is an acceptable solution.

thefz3• 4 years ago

Wells and groundwater pretty much work only for those living atop the water table. In the Alps we rely on water stored under the form of glaciers for drinking, sanitary and energy generation. The latest megasummer with the freezing point well above 5000mt decimated our storage which took thousands of years to accumulate.

sph4• 4 years ago

The economic aspect is the social aspect.

It does not have to be black and white, with or against us. People have not frozen to death because of a cold autumn and prices to the roof. Can we talk about that or shall we resort to fatalism?

dtech• 4 years ago

Can you expand on this or provide sources? At least in my countries the gas storage is now-empty gas fields that used to contain natural gas anyway, I have a hard time seeing how that could contaminate water sources.

eecc• 4 years ago

The mild weather after a scorching summer is turning the continent into a desert. Without an exceptionally wet and cold winter the European water basins will be toast next year. The italian Pianura Padana has seen one of the worst droughts in centuries.

discordance• 4 years ago

https://archive.ph/w5YqE

politelemon• 4 years ago

enjoyed the warmest October

I abhor this kind of language that news sites use. It takes away from the seriousness of the underlying cause (and its effects), and associates hot/warm weather with "good". Public apathy towards climate change starts here.

hutzlibu• 4 years ago

I did enjoy the warm and sunny october.

Would anything have been any better, if I felt miserable about things, I cannot really change?

throw827474737• 4 years ago

That's true.. but on the other hand: I'm fully aware of the climate crisis .. still the weather for the individual here was pure enjoyment.. it is not so much of a news language thing here, but even climate activists enjoyed the weather?

dan-robertson• 4 years ago

I don’t enjoy warm autumn weather because The Economist tells me to. I don’t think avoiding talking about the weather like a human is necessary or helpful for dealing with climate change. But perhaps part of this is that I generally don’t believe that fixing climate change has much to do with terrifying the public about it.

Furthermore, it’s generally untrue that any particular warm October is due to climate change but rather the average October temperature over many years.

VBprogrammer2• 4 years ago

Yes, it feels like cherry picking when people say something like "climate change makes severe weather events more likely" in connection with a drought or unusually hot spell but ridicule anyone who tries to use a particularly cold winter as evidence that climate change is not happening.

We should avoid the association between climate and short term weather phenomenon altogether.

And yes, the COVID lockdowns showed the limits of individual action on climate change. Even if people can't leave their house (except for some limited purposes) the reduction in carbon emissions are relatively small. It's a problem for government and industry to solve in the main. The only difficulty is how to ensure that we elect governments who take it seriously without scaring some people?

Aldipower• 4 years ago

I enjoyed it very much. It was good. Winter is coming now.

nonrandomstring• 4 years ago

We're holding-off on running the heating in anticipation of having to crank it up to 11 come January.

What's galling about the stupidity of mass media is their ability to spin a story by focusing on 4 weeks, without any scope or informed consideration of a bigger picture.

sph4• 4 years ago

It is relatively good. Climate change is bad, families left out in the cold because they can't afford rising gas and electricity prices is bad, so we are lucky in our being fucked. It could have been worse.

Silver lining and all that.

dotancohen4• 4 years ago

Looking at this as a silver lining is like looking at your arm amputation as a silver lining to your hangnail.

pjc50• 4 years ago

I can enjoy an unseasonably warm October. I did not enjoy the unseasonably warm July.

evandijk70• 4 years ago

The seriousness of climate change is not lost on me, but your comment is rather heartless. In the UK the 'eating or heating?' question is real for many families this winter. It is fair to say that the warm October was a gift from the gods.

klodolph• 4 years ago

"Heartless" is uncalled for. The warmer weather may mean that fewer people are suffering today, but it is also a symptom of a trend that leads towards more suffering in the future. Is it heartless to think of those people in the future?

radu_floricica3• 4 years ago

Ok, since you started, let me challenge that head on: so far climate change is good. Cold-related deaths decreased something like 1-2 orders of magnitude more than a paltry increase in heat deaths.

You're trying to make me fill guilty for enjoying nice weather? Really? Well, how do you feel about advocating for literally more dead people in the foreseeable future?

And before you try bringing doomsday scenarios into that, no official prediction I've read supports a Venus-like scenario. On the other hand, simply by following current trends in 50 years we'll have massively increased resources and tech: great batteries, probably fusion, AI, efficient carbon capture and the cheap power to do it etc. So by pushing against climate change now, when we're still relatively poor and primitive, you just divert resources from growth and end up killing more people than needed.

maxbond• 4 years ago

You're counting chickens a bit early.

CyanBird• 4 years ago

Cold-related deaths decreased something like 1-2 orders of magnitude more than a paltry increase in heat deaths

I think this might be important to mention

Most of the world indeed does not live in the US or Europe

tsimionescu2• 4 years ago

Wow, that's almost delusional. It's like you don't understand what drought is, or haven't looked at any of the predictions about heat waves, the mass extinction events, the extreme weather, the fires...

This is a new level of madness from the fight against the fight against climate change.

Don't look up, my friend.

badpun2• 4 years ago

We can't be in denial about climate changes having positive effects as well - e.g. cold countries will spend less on winter heating. That's normal, basically every phenomenon has positive and negative consequences, and what ultimately counts is the net impact.

magnetic-recoil• 4 years ago

I think this might have been a bad choice of words, I interpret the writer as intending "enjoyed" here to mean "to have had the use or benefit of" the warmest October, rather than explicitly endorsing that unseasonably warm weather is pleasurable. One does not need to be satisfied by something they "enjoy", especially in formal or legal language.

uri4• 4 years ago

Lets hope climate warming will kick in this winter. Or 30 million refugees from Ukraine will flood Europe...

bertil• 4 years ago

There might be as many people from Pakistan, East Africa, or China who have to migrate because of global warming this winter too. Not sure whether they’ll go to Europe, but millions isn’t an exaggeration in those cases.

cromka• 4 years ago

China is too big of a territory; if the Chinese needed to migrate because of global warming, they'd likely move within their own land. Probably the same case with Pakistan.

eunos• 4 years ago

China

D Folks from Dongbei moved to South even as far as Sanya because of the warm among other reasons. Warmer Dongbei might attract more people back.

DocTomoe2• 4 years ago

Unfortunately, that does not translate to lower customer-end prices.

schlepper• 4 years ago

Which makes sense given that gas storages have been filled almost to full capacity over the past weeks/months for prices much higher than they are now.

DocTomoe2• 4 years ago

Which would be a good argument if back in the day, when gas storages were filled cheaply in summer, that price would be given over to end customers in winter as well. But of course, that was not the way things went.

hef198982• 4 years ago

Simple reason for that: gas storage facilities are nearly full all over Europe, and because of the warm weather and general frugality they aren't emptied. If you can burn gas right now, and you can use enough of it to to be able to buy on the spot market, you could have a field day. Could, because even if all the above applies, there might be long-term hedging contracts in place that have been signed already limiting your flexibility.

jonatron• 4 years ago

I'm on a time of use electricity tariff, and last night it was around £0.02/kWh between 3AM-5AM. The standard price cap rate is £0.34/kWh

pydry• 4 years ago

Mild autumn weather [ and not enough storage capacity to take advantage ] has sent European gas prices plummeting.

90% full in the UK means about a week's worth of gas. In Germany it's about 2.5 months.

hef198982• 4 years ago

Short term not to bad for the UK, you can now sign contracts for delivery in one to two weeks at significantly lower prices.

rowanajmarshall2• 4 years ago

Although the UK has an appreciable percentage of Europe's LNG re-gasification capacity, while Germany has none, and imports LNG via Belgium and the Netherlands instead. The UK has storage, it's just sitting in ships off the coast.

blibble• 4 years ago

and a large chunk of UK supply is still domestically produced from the North Sea

79522• 4 years ago

And the UK has relatively more secure sources in Norway and the North Sea.

empedocles3• 4 years ago

Unlike oil, LNG boils off while sitting off the coast, so this is not a long term strategy.

TheLoafOfBread• 4 years ago

In UK it is completely self inflicted, because they got rid of gas storage infrastructure in 2017

https://www.theguardian.com/business/2017/jun/20/uk-gas-stor...

sgt1012• 4 years ago

This has reopened (25%) and is excluded from the economist's figures. In fact some research [1] shows that approximately 93 days of supply will be stored in the Rough gas facility at 25% (28Bcf {capacity}/313Mcf {daily}). This is inadequate (of course) and has probably not been filled yet, but should be helpful to the UK if it can be properly commissioned.

[1] https://www.costadvice.co.uk/latest-news/will-the-reopening-...

moffkalast• 4 years ago

Well it made sense at the time, as it was May.

rasz• 4 years ago

Joke being Russian flagrant disregard for climate change contributed to warmer winter.

Tade0• 4 years ago

To be completely fair they were mostly just the drug dealers, not the drug addicts.

That being said my Russian friend who moved to the EU a few years ago was shocked with the prices of fuels around here and promptly sold her 20yo Camry, which was quite the gas guzzler by EU standards.

Fuel is cheap in Russia and for Moscovites like her doubly so.

alwayslikethis2• 4 years ago

On another note, Russia is also among the least negatively affected countries by climate change. With the weather warming up, they may gain new arable land and even a few ports in the Arctic and Pacific.

birracerveza3• 4 years ago

I'm surprised I haven't come across conspiracy theories that use this as confirmation that "they" control the weather...

bheadmaster3• 4 years ago

I'll admit it has passed my mind several times. I never said it out loud (until now), but the coincidence that the very year EU loses its main gas supply we get sunny winter without snow at all... I know it's probably a coincidence, but my mind doesn't like coincidences. There's always this "what if" voice inside my head.

robbiep• 4 years ago

The mind boggles

theCrowing• 4 years ago

I admit it I am working at a secret European agency with the purpose of climate control. We can only make it warmer right now but there is a commit open that could fix our issues with the overheating. They fired the guy who wrote it for cost saving measures, his LOC over year was a bit low but I bet the junior refactoring some legacy code can do it. His LOCs are of the fucking chart. /s

birracerveza3• 4 years ago

It's actually the opposite, you have a pattern-seeking brain that likes coincidences. It's why we notice patterns, because some are not coincidences but outright consequences, however indirect they may be!

But there's a lot of coincidences in the world, some being so unlikely and so unfortunate, our mind can refuse to accept that, well.. it can be just a coincidence.

The longest-reigning UK monarch dies at the start of the shortest term PM's tenure ... it's incredibly unlikely, yet it happened. Should there be an explanation behind it? Or maybe it's just a coincidence? You decide.

tpm• 4 years ago

We do have a mostly sunny warm autumn, but winter begins in December and runs until March, so let's wait a few months with the verdicts.

pasquinelli3• 4 years ago

the american pacific northwest had a summer that ran into mid-october, so the warmer than usual weather is not just in europe.

nerdponx• 4 years ago

I literally know someone who believes global warming is a hoax to cover up the fact that "they" control the weather. That belief is so entrenched that this is more like passive confirmation of an obvious fact than an evidentiary bombshell.

paganel• 4 years ago

Looking at this chart [1] they're still 6 or 7 times more expensive compared to two years ago and further back, i.e. ~15 EUR/Mwh compared to the present ~100 EUR/Mwh. No energy-intensive industry can sustain a 6 or 7 times price increase of its core input.

[1] https://tradingeconomics.com/commodity/eu-natural-gas

dotancohen4• 4 years ago

That's going to shut down a lot of aluminium in countries that use petrochemicals to process it. Iceland is going to see its industry boom, as they use geothermal to process aluminium. I'd once heard the argument that Iceland exports energy in the form of aluminium billets. That's becoming more and more apparent now.

Cthulhu_• 4 years ago

It already has, multiple aluminium smelters have suspended operations for the winter. Other companies affected are e.g. bakeries and a food cannery, which will affect prices of basic foodstuffs - which are already up due to various factors, including the Russian invasion. Bird flu is also a thing, causing chicken and egg prices to soar.

euroderf• 4 years ago

"Welcome to Bauxite Island"

badpun2• 4 years ago

These are the month-ahead contracts prices. The day ahead are at around 10% of that (the gas is almost free, compared to what it costed just couple months ago). It's probably just temporary curiosity though.

photochemsyn6• 4 years ago

One major theme in the ongoing US-Russia conflict over the past decade-plus (dating back to at least 2008) is a fight over who gets to sell oil and gas to Europe. With the destruction of the Nordstream pipelines, and with countries like Qatar refusing to alter long-term energy contracts to increase supplies to Europe, and with Iran still under the Trump-era sanctions (which Biden continued), that mostly leaves the USA as the primary supplier. See this from past summer:

https://www.reuters.com/business/energy/us-lng-exports-europ...

"...the United States has already sent more gas to Europe during the first six months of 2022 than it did in all 12 months of 2021. If exports to Europe continue at the same pace through the second half of 2022, the total increase over 2021 would be around 45 bcm [billion cubic meters]."
"Benchmark gas prices in Europe have averaged $34.06 per million British thermal units (mmBtu) so far in 2022 compared with $29.99 in Asia and $6.12 in the United States. That compares with average 2021 prices of $16.04 in Europe, $18.00 in Asia and $3.73 in the United States, data showed."

This also results in U.S. electricity ratepayers having much larger bills, driving across-the-board inflation - but fossil fuel shareholders and executives are certainly raking in the profits. Mission accomplished?

https://energynews.us/2022/10/12/natural-gas-prices-are-risi...

dotancohen4• 4 years ago

  > With the destruction of the Nordstream pipelines ... that mostly leaves
  > the USA as the primary supplier.

Does that suggest motive for the destruction? Who else has both motive and means?

pavlov2• 4 years ago

Selling more gas to Europe isn’t a massive windfall to USA. The Biden administration has bigger fish to fry and wouldn’t risk such an intervention in Swedish waters just as Sweden is joining NATO.

My money is on Russian hardliner factions operating rogue without Putin’s approval. He can’t admit he doesn’t know who did it. The Russian state security apparatus is so large, we have no idea what kind of internal tensions exist. Putin may have unleashed something he doesn’t control anymore.

photochemsyn6• 4 years ago

The means is an interesting question. Having done a little scuba diving, the depth of the pipelines (70-90 meters) put it out of range of any diver without a sophisticated mix of gases (Trimix diving). A remotely operated vehicle would also work. The pipelines were made of thick steel wrapped with concrete, so some kind of high-tech explosive was necessary, perhaps shaped charges (used in the oil industry for blowing holes in pipe casing to increase oil flow, for example).

https://en.wikipedia.org/wiki/Submarine_pipeline

https://en.wikipedia.org/wiki/Trimix_(breathing_gas)

See the EPA for details. I guess it's okay to link to this, it's an official US government site.

https://www.epa.gov/sites/default/files/documents/casingperf...

Perhaps locating both of the pipelines deep under the water would be difficult? Point being, the ability to do this might not be as exclusive to nation-states as it has been portrayed (note the ease with which the videographer found the pipelines with an ROV, although the big bubbles probably helped). So, who knows?

As far as who benefited, well, Russia certainly seems to want to continue selling gas to Europe, and is pushing for repair of the pipelines. The USA wants to replace Russian gas with American LNG. Coming up with a reason for Russia to do it would require some mental gymnastics, I think.

https://www.aljazeera.com/news/2022/10/12/putin-offers-to-bo...

kstenerud2• 4 years ago

One major theme in the ongoing US-Russia conflict over the past decade-plus (dating back to at least 2008) is a fight over who gets to sell oil and gas to Europe.

No, it wasn't. America wasn't pushing to sell to Europe, and Europe was becoming more and more reliant on Russian and Asian gas. The shift to American gas (and every other country they can get it from) happened after Russia invaded Ukraine and then shut off the taps when Europe instituted sanctions.

Iranian sanctions were mostly inertial, but have now turned out to be good considering that Iran is negotiating nuclear tech in exchange for shipping weapons to Russia.

photochemsyn6• 4 years ago

My view is that the split with Putin really started in late 2003, when Putin rejected an Exxon offer to take a controlling stake in Russian oil via the purchase of Yukos, and then jailed Khodorkosky (who was close to various USA interests) on tax evasion charges. Prior to that, Putin got a lot of favorable mention in the US press, he visited GW Bush in Texas, was an ally in the 'war on Terror' etc. If Putin had taken the offer, Russia would have become more like Saudi Arabia - i.e. part of the petrodollar recycling system. Putin's domestic popularity in Russia since then is largely due to the fact he redirected oil money to domestic economic growth and military reconstruction, rather than to Wall Street funds.

Everything since then has been one pipeline war after another, from the perspective of energy deals at least. Georgia 2008, for example, was "not a pipeline war!" according to the Guardian (meaning a lot of people were saying it was, and they were pushing back). Note how the 2006 BTC pipeline route (Baku-Azerbaijan-Turkey) was chosen to bypass Russia?

https://www.theguardian.com/world/2008/aug/11/georgia.russia...

After that, there were the two competing pipeline deals in Syria, c. 2009-2010. One was a Russia-Iran deal, one was a Qatar-Saudi-USA deal. In 2010, Assad took the Russia-Iran offer, and in 2011, Obama's government OKed a CIA destabilization-and-regime change program in Syria. If Syria had taken the other offer, I doubt that would have happened. This Ukraine war is just more of the same (plus, a new Cold War is good for military procurement budgets).

Of course, energy geopolitics isn't the only issue, but anyone who has read Steve Coll's "Private Empire: ExxonMobil and American Power", or Daniel Yergin's "The Prize: The Epic Quest for Oil, Money, and Power" will recognize it's often the central reason for international conflicts.

As far as the clearly reprehensible human rights record of Putin being the reason for the conflict, that's laughable - just look at Mohammed bin "Bone Saw" Salman in Saudi Arabia, or the Yemen war. Now if MBS pulled out of Wall Street and ended the Saudi roll in petrodollar recycling, then we'd be hearing about the need for regime change. And if Putin and Assad had signed up for the petrodollar program, they'd be lauded as democratic reformers, and the Ukraine invasion would portrayed in the US media as a necessary action to dismantle neo-Nazi militias (see Yemen, again).

Sakos• 4 years ago

I was curious about exact numbers and found this in the most recent EU report:

https://imgur.com/a/HIkyO05

stefan_• 4 years ago

LNG was never going to be competitive with pipeline gas, no one was in some "fight" over US or Russia selling to EU. But there sure is a long, long history of Russia using its gas supplies to blackmail and manipulate ex-USSR and other states, including using it's old puppet governments in Ukraine to literally disarm it.

Their coercion extended to bombing pipelines, too, of course:

https://en.wikipedia.org/wiki/2006_Russia%E2%80%93Georgia_en...

Finally, the price of LNG is so high as to be thoroughly uninteresting for bulk uses like heating. That means it is rapidly being displaced by other methods like heat pumps. The future isn't "LNG from the US", it's "no gas" and current events have very much turbocharged that transformation.

marcinzm2• 4 years ago

The US (in 2021) used 827 billion cubic meters of natural gas per year and produced 934. The amount it's expected to send to Europe (45 billion cubic meters) amounts to under 5% of its own production which has been increasing every year. Most of that hasn't even been sent yet so the percentage up to now is even smaller.

So yeah this was never about the US selling natural gas to Europe.

photochemsyn6• 4 years ago

You have to add on the 34 bcms to the 45 bcms for a total of 79 billion cubic meters expected to be exported to Europe in 2022. Prices in Europe for gas seem to be about 10X higher than in the USA. Costs of LNG export are also higher, but I imagine the profit return on those European sales is about as large as their total profit on all domestic USA sales (and note domestic prices have doubled as well).

This is pretty basic supply and demand stuff. It's hard not to conclude that a major US goal was cutting Europe off from Russian gas, and replacing that with American LNG. You can find all sorts of quotes to this effect from the US government before 2022:

(March 2021) "‘President Biden has been very clear, he believes the pipeline is a bad idea, bad for Europe, bad for the United States,’ Blinken says in Brussels"

https://www.marketwatch.com/story/secretary-of-state-blinken...

So, if Europe's not going to get gas from Russia, who does that leave? Perhaps the glut of fracked American gas, provided in LNG tankers, instead?

https://www.nytimes.com/2019/12/11/business/energy-environme...

(Sep 2021) "Natural Gas Boom Fizzles as a U.S. Glut Sinks Profits: Chevron’s multibillion-dollar write-down of gas assets is the most recent sign that the gas supply has far outstripped demand."

These dots are not that hard to connect.

ed_balls2• 4 years ago

"With the destruction of the Nordstream pipelines"

They are not destroyed. There are 4 pipes in total and 1 pipe of NS2 is intact. Most likely Russia destroyed the other pipes to get NS2 working (you want gas? Need to certify NS2 and we won't pay contract penalties, because this is not our fault)

Resources blackmail didn't work, hence nuclear threats and mobilisation.

ed_balls2• 4 years ago

Source for the downvoters https://www.reuters.com/business/energy/single-line-nord-str...

pcrh• 4 years ago

Is the difference in price between Europe and the US down to shipping costs?

nyokodo4• 4 years ago

To transport Nat Gas you have to cool it down to -265F thereby reducing its volume 600X to transport economically as a liquid (LNG), then it needs to be safely turned back into a gas at its destination. That is expensive relative to pipeline fed Nat Gas.

andsoitis• 4 years ago

Mission accomplished?

What is the mission?

m0004• 4 years ago

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

empedocles3• 4 years ago

This is because companies buy long term contracts, which are still priced higher than the spot price on the, IMO reasonable, assumption that gas prices will rise again next year as the war continues (and Russia has more options to escalate e.g. cutting TurkStream).

cpursley• 4 years ago

Why would they cut (I assume you mean turn off, not blow up) Turkstream? Did you see the recent dealings between Russia and Turkey to expand those gas transit routes via that direction?

Am4TIfIsER0ppos• 4 years ago

The market is unable to function normally because of government interference. I expect there is a supplier and a contract somewhere that will give you the spot price. Furthermore the temperature has dropped so I expect demand has increased again so are you really sure you want that contract?

sph4• 4 years ago

I am ambivalent on the idea of a completely free market.

Because while I believe it would self-regulate, in a vacuum (or anarchic system), a free market paired with a government means interference, nepotism, laws that favour monopolies and kills competition.

So when people like Liz Truss enter 10 Downing Street and claim they want to enact "free market policies", the result is just utter economic upheaval and chaos that hurts regular people further.

kuratkull• 4 years ago

People seem to expect the free market to adapt immediately, for consumers immediate benefit. The market will regulate itself, but it may not happen in timeframes that people are comfortable with.

m0004• 4 years ago

No, consumers just expect it to show consistent reaction times.

A rumour is typically enough to warrant an overnight price hike in consumer prices. While for experiencing reductions, consumers have to wait for a few months for the market to "adapt". And in the end, it usually is the consumers that adapt to the increased prices, so companies don't see any good reason to reduce them.

woah• 4 years ago

These oil and gas futures are all publicly traded, as are most of the corporations working in the field. If it’s really so easy to make money because the market is rigged, guess what? You can get in on the action too.

Workaccount23• 4 years ago

Everybody complains that energy companies manipulate prices to enrich themselves. For some reason though none of them are happy that they can use their inside knowledge to get rich...

consp• 4 years ago

It takes money to make more money (especially in any appreciable amount) and that is not possible for everyone so the "You can get in on it too" argumentation is quite insulting to a lot of people as far as I am concerned.

andrepd• 4 years ago

Sure, let me just get a couple hundred million in capital, I'll be there in a minute.

If people are complaining that something is wrong, the answer isn't "well why don't you take advantage too"

kube-system3• 4 years ago

This is because there are multiple markets for gas, depending on when and where you want the gas.

The price for gas being delivered today is not the same as the price for gas in January. Because in the meantime, someone needs to store it.

SilasX• 4 years ago

Right — you might remember during the big freeze in Texas (February last year), a lot of people were ridiculed for using Griddy, whose very premise was “hey don’t pay those inflated utility prices, just pay the usually-cheaper spot price for your energy!”

The utility price is higher because the result of longer-term price-locking contracts. The spot price can spike pretty hard, wiping out your gains, as those customers learned then.

(Sorry, I don’t know the standard jargon for some of those concepts.)

collegeburner• 4 years ago

"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.

jve2• 4 years ago

On some Gas thread, someone posted a link where you could see full %, ingress and egress graphs of gas storages over time across europe. I can't find it. Could someone post it please? Thanks in advance.

hdjjhhvvhga2• 4 years ago

Do you mean this one:

https://agsi.gie.eu/

jve2• 4 years ago

This is it! Thank you.

dariusj18• 4 years ago

Ukraine seems to be the odd one out, this is not a surprise of course, but it could at least be good, they have the opportunity to buy the gas at the bargain rates.

hulitu• 4 years ago

Mild autumn weather has sent European gas prices plummeting

Ok. So the gas prices are influenced by the weather ? That explains some things. /s

HPsquared• 4 years ago

The weather affects the demand for gas which affects the price. How is this controversial?

krobbn2• 4 years ago

"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 so many LNG ships outside the coast of western Europe.

bombcar2• 4 years ago

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.

jimnotgym• 4 years ago

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

coldpie• 4 years ago

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

thorin2• 4 years ago

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.

nurblieh• 4 years ago

Contango! Great word. For a fun explanation, check out Planet Money’s “Negative Oil”, https://www.npr.org/2020/04/22/842095406/episode-993-negativ... .

2Gkashmiri2• 4 years ago

I was on hn when that happened last time. I felt like but could not convince someone to "buy" me an oil tanker for negative money, only for a short period but I could boast about "being an owner of an oil tanker once". Sigh. If only someone could help

_glass• 4 years ago

Or you can use a financial instrument futures. I never bought futures, just learned about it in university. But there you agree to a future price, so akin to storing it.

whatwherewhy• 4 years ago

Future is a contract with delivery in the future - exactly what this comment is taking about. The future markets for Dec/Jan/Feb have already priced in the storage problem many months ago, you can't obtain them for today's low price.

whatshisface• 4 years ago

If everyone agrees that the price will go up but nobody can buy and store it, the futures price will actually be higher than today's price.

arikrak• 4 years ago

Run the gas through generators and generate Bitcoin with the extra electricity, then spend it on gas futures?

dirtyid• 4 years ago

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

krobbn2• 4 years ago

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

kristo• 4 years ago

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

somedude895• 4 years ago

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.

Tarsul• 4 years ago

I think it helps but it's hard to measure as long as the outside temparatures are not comparable to last years. I follow the diagrams for Germany and right now consumers use about 30% less than the average of 2018-2021[1]. I think many people reduce their heating not just to help Ukraine etc. but also because they (we) know that it's way too expensive and we certainly weren't looking for much cost savings before. I thought I did last year (remember: already 2021 there was news that russia was not delivering as much gas as they usually do) but I'm actually on track to use like 50% less than last year. But yeah, thats just anecdata.

[1]https://www.spiegel.de/wirtschaft/erdgas-versorgung-europas-...

slim• 4 years ago

Maybe it has an effect but not the one you expect (it makes people hate Russians)

benj1118• 4 years ago

Electricity usage in the UK is low compared to last year.

Https://grid.iamkate.com

If you look at past year demand it's currently 28.1gw weekly average v 31.6gw last year so that's a roughly 10% drop.

guerrilla5• 4 years ago

It depends on the country. Last I read here it was down 7%, other places down around 15%... Germany has had legislation since at least Sept. but I'm not sure where to find the results of that. My personal consumption is down 66% for October and I think my neighbor's is yet more. Also note, it's the warmest winter on record in many places in Europe.

yakak• 4 years ago

Older people I know in Switzerland are definitely taking action, I've seen no action in businesses which use considerably more energy, though there are less businesses overall.

hnbad• 4 years ago

I think the problem may be that (at least in Germany, not sure about Switzerland) we've had awareness campaigns about conserving energy and water for ecological reasons since at least the 1990s. I recall learning in school ca. 2000 to turn off the light when leaving a room, to take short showers instead of using the bathtub, to turn thermostats to 19°C or less, to soap my hands before turning on the faucet and to use the water-saving flush after only peeing. This wasn't related to any particular shortage.

GaylordTuring• 4 years ago

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?

sharikous• 4 years ago

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 ..."

TremendousJudge• 4 years ago

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.

neuronic• 4 years ago

Yes, but Europe chose to ignore the 2014 invasion to keep the cheap fossil fuels running and to prevent any major escalation with a nuclear power over a mere peninsula. The hope also was 'Handel durch Wandel' - 'Change through trade'.

I can only speak for Germany, but the political discussions about Crimea and Eastern Ukraine did exist for years. However, the government and opposition parties were somewhat in Russias pockets - at the very least their election was dependend on many jobs in industries across different federal states which required cheap Russian gas. Also, the German East is still fairly connected to Russia on a cultural level and this is where you would find most German opponents against NATO these days. Communities directly affected include Lubmin in Mecklenburg-Vorpommern where Nord Stream 2 is landing as well as Schwedt/Oder with the decades old PCK oil refinery that is specialized to process Russian oil (not all oil is the same) and supplied most of the German North East with fuel.

Russia has certainly funded a lot of online trolling, political actors (AfD) and disinformation to achieve their goals. For example, they tried to actively prevent Germans from switching to American LNG / fracking gas. German Angst [1] is a pretty fertile ground for disinformation. It's also what drives opposition against nuclear power, more so than the more reasonable arguments regarding economics and prices.

Regarding gas, it's mostly about heat generation for industry and NOT electricity where it is a minor player [2]. Natural gas is mostly used for manufacturing and to a lesser scale for quick up/down scaling of electricity generation as support to the baseline.

[1] https://www.dw.com/en/germans-and-why-they-worry-about-germa...

[2] https://app.electricitymaps.com/zone/DE

csours• 4 years ago

When did WWII start? It depends on where you lived.

In 2014 they had a fig leaf of not using uniformed Russian military. It was a transparent fig leaf, but we all need our fictions to get through the day.

MomoXenosaga3• 4 years ago

Yeah Crimea invasion was basically Sudetenland.

Nobody really thought Putin would become completely unhinged.

regnull• 4 years ago

The Russian annexation of Crimea had at least some ambiguity. Yes, it was illegal, but Crimea used to belong to Russia, it had majority Russian-speakers, and there was no violence on any significant scale during takeover. The question was, if they are taking over your territory, why don't you fight back? The answer is obviously complicated (and for the record I fully support Ukraine, and I think Crimea and all other occupied territories must be returned to Ukraine). Russia has succeeded, to some extent, making it a "one-of" issue. Now, of course, they've completely destroyed their previous position, it turns out Crimea is not special, they basically try to annex any territory they have any sort of control over.

antod2• 4 years ago

Yeah, the Crimea annexation was dodgy as hell but as you say more ambiguous. The population had enough imported Russians (and "exported" Tartars) that they could run bullshit referenda and claim the people wanted annexation.

The reason the 2022 invasion (compared to Crimea) got the backlash it did from most of the world is that it was so unambiguously clear cut and telegraphed in advance despite Russia's denials they would invade. Russia left no room for its usual grey area bullshit to work for them. It seemed about as unambiguous as Poland in 1939 vs eg the murkier annexation of Austria in 1938.

tebbers• 4 years ago

I still haven't turned on my gas central heating yet once in London. This week is set to peak at 16/17 degrees too which is pretty warm for me.

MomoXenosaga3• 4 years ago

No it hasn't I'm still paying quadruple compared to last year.

Sixty euro for 19m3. Do the math.

Thank god this country is rich enough to write a 22 billion cheque I have no idea how the less fortunate countries will pull through.

lencastre• 4 years ago

For sure not the crazy buying spree,… and it’s not yet winter. Prepare for the worst hope for the best, damn the gas prices. Health is priceless, confort is subjective.

Mild autumn weather has sent European gas prices plummeting

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