Winter gas supplies could lead to price fall

1carminestocky

Any thoughts?

http://www.ft.com/cms/s/0/2f3eec8a-90ab-11dd-8abb-0000779fd18c.html

By Ed Crooks, Energy Editor
Published: October 3 2008 00:56 | Last updated: October 3 2008 00:56

Gas supplies over the winter will be stronger than they have been for many years, creating the potential for a fall in prices, a leading consultancy says in a report released on Friday.

The report comes as National Grid, which runs the gas and power transmission networks, said electricity supplies would be sufficient to meet demand over the winter, even if conditions were harsher than expected. The Met Office has forecast a warmer than average winter.

The outlook raises the prospect of some easing in wholesale gas and electricity prices, which have risen steeply in recent years.

Retail prices, which were raised sharply in two steps this year, are unlikely to fall soon because suppliers will want to restore margins. But a fall in wholesale prices would ease pressure for further retail price rises next year.
Friday’s report on gas supply from the Energy Contract Company argues that the market will be well-supplied because of new import capacity, including the South Hook and Dragon terminals for importing liquefied natural gas into south Wales. There is also the potential for more imports from Norway, the biggest source of Britain’s gas imports, where increased production at the Ormen Lange field will offset lost supply from Kvitebjørn, another field where an important pipeline sprang a leak and had to be shut.

Britain will have to compete with other countries to attract gas supplies – Norwegian gas can go to the continent, while LNG can be diverted to lucrative Asian markets. But UK gas prices are significantly higher than continental prices and the cost of LNG in Japan has been falling, suggesting Britain may be a more attractive destination for gas sales.
“There is quite significant potential for a fall in prices, because the UK market now looks overpriced relative to the rest of Europe,” said Niall Trimble of the Energy Contract Company.

Lower gas prices would help bring down the cost of electricity, because gas is typically the most expensive form of power generation, used only when demand is strongest, and so sets the price. Electricity prices for November and December have soared because of fears supplies will be tight, hitting a record on Thursday of £134.50 per megawatt hour.

Some large coal-fired power stations have been shut while equipment to clean the sulphur from flue gases was installed. There has been speculation the planned restart of British Energy nuclear power stations at Hartlepool, Heysham and Dungeness, scheduled to be on line by the end of the year, could be delayed.

However, energy companies said on Friday any tightness in the market was likely to be short-lived. British Energy insisted its three plants would restart as planned.

1carminestocky

Seems to be a recurring theme in the press!

http://www.express.co.uk/posts/view/64573/Gas-bills-set-to-fall-next-year-as-supply-from-abroad-booms

Gas Bills Set To Fall Next Year As Supply From Abroad Booms

Saturday October 4,2008

By Louise Barnett, Consumer Editor


FAMILIES could see gas bills fall next year because of a glut of overseas supplies this winter, it emerged yesterday.

The National Grid says 10 per cent more gas will be imported to the UK than last winter because North Sea reserves are so low.

To meet demand, supplies are coming from Norway and elsewhere in mainland Europe.

Energy Contract Company managing director Niall Trimble said the good availability of gas raised the possibility of wholesale price cuts.

“There is quite significant potential for a fall in prices because the UK market now looks overpriced relative to
the rest of Europe,” he said.

Cheaper wholesale gas will come as a welcome relief to hard-pressed householders after a summer when all six energy firms hit customers with eye-watering price hikes.

Now that the UK will draw on foreign supplies more than ever, it could at least stave off the feared second wave of gas bill price hikes.

Some, but not all, of the six big energy suppliers pledged to hold prices steady until early next year.

But analysts have predicted more grim bill increases after that if wholesale costs do not come down. At the same time, wholesale electricity costs have soared for November and December.

This has created the biggest ever gap between electricity and gas costs, according to energy price experts Platts.



Spokesman Jonty Rushforth said wholesale gas costs for a three-month supply from January had fallen.

“They have dropped by about 10 per cent in the past couple of weeks but they are still about double where they were at this time last year. They are still at historic highs,” he said. This drop is mainly due to crude oil costs tumbling from a July high above $147 a barrel. Oil yesterday dipped below $93 a barrel on the global markets.

Wholesale gas prices tend to track the direction of oil prices, usually about six months later.

Stuart Lea, head of energy trading at consultancy Inenco, said that the growing reliance on imported gas meant UK customers were more exposed to conditions on mainland Europe. “If it gets very cold on the Continent and there is a high demand for Norwegian gas, then the levels of flow may recede and have a bullish impact on price,” he explained.

Mr Lea said wholesale gas could come down even more if oil stayed well below $100 a barrel. But, on a note of caution, he added: “It is October.

“The weather hasn’t been very cold and it is only when the weather starts to pick up in the UK and on the Continent that prices start to be tested.”

fatlad1971

1carminestocky wrote: »

Any thoughts?

http://www.ft.com/cms/s/0/2f3eec8a-90ab-11dd-8abb-0000779fd18c.html

Who was trying to tell me we pay less than most European countries for our gas and electricity :rotfl:

Its just a real shame some people have fallen for the power companies propaganda and have locked themselves into tariffs fixed at the top of an historical high point in energy wholesale prices.

1carminestocky

fatlad1971 wrote: »

Who was trying to tell me we pay less than most European countries for our gas and electricity :rotfl:

Its just a real shame some people have fallen for the power companies propaganda and have locked themselves into tariffs fixed at the top of an historical high point in energy wholesale prices.

I think we know who that person is, don't we?

Britain will have to compete with other countries to attract gas supplies – Norwegian gas can go to the continent, while LNG can be diverted to lucrative Asian markets. But UK gas prices are significantly higher than continental prices and the cost of LNG in Japan has been falling, suggesting Britain may be a more attractive destination for gas sales.
“There is quite significant potential for a fall in prices, because the UK market now looks overpriced relative to the rest of Europe,” said Niall Trimble of the Energy Contract Company.

basmic

Seems like only last week we were heading into an energy crisis

• http://www.guardian.co.uk/business/2007/oct/31/politics.homeaffairs
• http://www.dailymail.co.uk/news/article-1062089/Back-Dark-Ages-National-Grid-raises-spectre-blackouts-winter.html

:think:

1carminestocky

Let's be honest, these days things really CAN change in 24 hours, let alone in a week. These are quite crazy times, and nothing would suprise me any more. Whilst I don't claim to be able to see into the future (beware self-appointed experts on here giving advice), from MY OWN perspective I'm glad I haven't capped/fixed my fuel. But only time will tell who will prove right, I suppose.

housebug

Gas prices set to fall? That's a turnabout from what's been being shouted for weeks now ie: that they are going to be hiked yet again in the new year. So which is it? Up or down?

And for the record, gas and electric prices in the U.K. are as much as 30% higher than on the mainland. You can have a blame-fest for that fact til the cows come home.

mech_2

But UK gas prices are significantly higher than continental prices

They mean wholesale prices.

Morn

Ahh,:eek:

I fell for the propaganda of fixed tariff and signed up to one yesterday. What should I do to get out of it, should I talk to the company or should I simply not sign the paperwork??

I used energyhelpline.

HELP

robnye

Morn wrote: »

Ahh,:eek:

I fell for the propaganda of fixed tariff and signed up to one yesterday. What should I do to get out of it, should I talk to the company or should I simply not sign the paperwork??

I used energyhelpline.

HELP

is there a 14 day cooling of period?

Morn

Just an update, I have spoken to the people at energyhelpline and they have told me that they will sort it out as they have not processed the switch yet.

Fingers crossed!!