Gas Market Manipulation

Terrylw1

• The key benchmark indices produced by at least one price reporting agency (PRA) and used increasingly in massive UK supply contracts are unreliable, and undermined by poorly-trained staff and over-cosy relationships between traders and price reporters.

• Traders regularly put price reporters under pressure to change prices they disagree with.

• Price reporters struggle to set accurate benchmarks because they lack detailed information about trading in the opaque so-called "over-the-counter" market and are dependent on what traders tell them about market activity.


Is it just me or could this be explaining the supplier-to-ombudsman relationship? Or even Ofgem?

chanz4

The government is as corrupt, just look at fuel prices most of the cost is tax

Cardew

backfoot wrote: »

Complex stuff if you ask me and yet we have posters with definite conclusions within hours of the breaking news

I suspect it is a racing certainty that the reports have substance; what else would we expect from the traders!

Is any manipulation of the market to the benefit of the producer e.g. Centrica etc, or the distributor e.g. BG etc?. Again a racing certainty is that trader's commission will be enhanced.

What is totally unclear(to me anyway) is the effect on the end consumer i.e. us!

cepheus

Dickensian Christmas ghosts get no reaction from gas executive

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backfoot

Lots of coverage on 5 live this morning. The whistleblower, Nick Clegg and the FSA all interviewed and taking it very seriously. FSA chappy says there are potential criminal sanctions of up to seven years imprisonment for market rigging.

Although highlighted by the end of September trades the allegation is that there is regular manipulation.

The FSA man drew parallels with the faulty LIBOR market in that traders were potentially able to manipulate the benchmark indices.

jd87

Hilarious how everyone here and elsewhere is frothing at the mouth over 0.00014 £/kWh.

This is a non-story by a journalist trying to further his new career after failing to make it as a trader, printed by a newspaper with an agenda. The gas trading market is so far removed from domestic prices it's unbelievable.

steve-L

jd87 wrote: »

Hilarious how everyone here and elsewhere is frothing at the mouth over 0.00014 £/kWh.

This is a non-story by a journalist trying to further his new career after failing to make it as a trader, printed by a newspaper with an agenda. The gas trading market is so far removed from domestic prices it's unbelievable.

Whereas the trading market and domestic supply are completely removed I think the point is that the whole supply chain is corrupt.

0.00014 £/kWh is like everyone in this forum getting scammed to send me 25p..... I'd soon be noticing the additional income..... even though its just 25p!

The funny thing is that somehow the whole system of trading is expected to function without price fixing....
The Energy secretaries have no idea how else to do it.... and its traded worldwide so its part of something bigger and essentially not regulate-able ...

ENRON should have been a wake up call...... but when the powers that be both elected and hidden were involved there was no other way they can support the supply of energy....

Energy Trading from futures in crude through local gas and ultimately power is corrupt through and through....

Its a bit like democracy... just the best answer we have.....

backfoot

jd87 wrote: »

Hilarious how everyone here and elsewhere is frothing at the mouth over 0.00014 £/kWh.

This is a non-story by a journalist trying to further his new career after failing to make it as a trader, printed by a newspaper with an agenda. The gas trading market is so far removed from domestic prices it's unbelievable.

JD what is your expertise in this area please?

I have no real idea about this part of the market or how it affects retail prices.

I am simply following the news because I have an interest in the Energy Market. On the face of it, market price setting of whatever level indicates a flawed market as the FSA man said this morning.

You seem to have some very clear views which currently aren't shared by authorities like the FSA. Both Government and Opposition political parties are showing their interest....although hedging their bets.

Should we be taking your comments seriously or not and why?

steve-L

backfoot wrote: »

JD what is your expertise in this area please?

I have no real idea about this part of the market or how it affects retail prices.

I am simply following the news because I have an interest in the Energy Market. On the face of it, market price setting of whatever level indicates a flawed market as the FSA man said this morning.

You seem to have some very clear views which currently aren't shared by authorities like the FSA. Both Government and Opposition political parties are showing their interest....although hedging their bets.

Should we be taking your comments seriously or not and why?

I don't know JD's but I do have a lot of experience.... I'd rather not go into as my companies clients might be upset as I can't think how to explain without revealing how I know!

I'm not an expert in energy trading but I work in a different energy area and colleagues are experts (some of them ex energy traders!)

He is correct..... in the lack of a direct link to consumer prices.

Basically the companies are split except at the top level
Take Centrica..... They have E&P, Energy Trading, Power Gen and then British Gas for UK domestic consumer supply.

Gas/kWh are simply commodities for trading.... they buy and sell on futures..... they have no preference to buying their own.... rather the cheapest....

It could be that the following industry news article is slightly inaccurate and DONG may have made massive trading losses in 2 successive quarters......
http://www.rigzone.com/news/oil_gas/a/121789/Dong_Banks_on_EP_after_Job_Losses

This might be about 8% of the total workforce.

backfoot

jd87 wrote: »

Hilarious how everyone here and elsewhere is frothing at the mouth over 0.00014 £/kWh.

This is a non-story by a journalist trying to further his new career after failing to make it as a trader, printed by a newspaper with an agenda. The gas trading market is so far removed from domestic prices it's unbelievable.

I have just been listening to David Cox who works for London Energy Consulting and is an expert in Gas Markets. He emphasised this is a very serious situation and the fact that the published example involves a price drop is not the significant issue. The benchmark prices used for many contract settlements are important because they involve buyers and sellers of gas at spot market or forward market rates.

Just because the price dropped during the alleged manipulation,it may favour buyers or sellers favourably depending on the terms of any contract. The important point is also, that if it is possible to manipulate the price, then potentially it could be common practice.

Adam Scorer from Consumer Focus explained that there must be linkage between the wholesale prices and end prices. (Indeed Mr.Bentley from BG has argued this in depth on this very forum) .Individual contracts will not affect the end price immediately, but in the longer run they must, as collectively they will guide the tariff price which the Suppliers ultimately charge.

Mr. Scorer said it was important for the investigation to establish and hopefully restore confidence for end customers in the market against the background of rising prices.

As for the whistleblower, he has embarked on a risky career limiting strategy as a Journalist, if there is nothing behind his allegations.

There will be a long way for this story to run including a full investigation. It is a political hot potato.