Gas Market Manipulation

steve-L

backfoot wrote: »

if it was pushed too far then the attempted manipulation was self defeating........

The message even from our in house experts is that the system isn't robust and is manipulated. The extent and impact is the bit for the investigation to determine.

Can't see this particular process surviving in its current format.

Possibly but it's not going to help consumers, more its going to hurt them.... they pay in the end and if not then the shareholders pay .... and that means UK people's pension funds.....

Regardless of anything else when the energy companies 'make to much money' they are subjected to a 'windfall tax'. Energy/Oil Companies are like smokers, drinkers and drivers. They have an been given a dirty name in order to subject them to huge taxes.

Despite what you may think selling Gas and electricity direct is not a high profit business for an 'integrated energy company'. Nor are pump sales.... or anything to do with a consumer.....

The issue is that without oil and gas trading there is no mechanism for companies to shift raw product. Without energy trading the whole system is inefficient and leads to higher costs for the consumer.

A company producing gas need a mechanism to sell that gas or use it themselves. Using it themselves is (usually) inefficient and more costly hence leads to higher costs to the consumer.
A company then produces power and that power has again to be sold using the National Grid.

Without trading we would see huge differences in gas and electricity price. Those people living close to a pipeline and cleaning facility would get much cheaper gas.... those living near a power station much cheaper electricity....

Indeed... without regulation many homes would just be uneconomic to supply..... The UK would look very different today had it not been for nationalised power and gas in the past. Heavy industry would have set up in different places, people would have to move closer to power.....we would probably have been forced to move away from the UK's houses into more communal housing as is seen on a lot of the continent.... where heating is provided by some sort of collective for the building and is non optional... you either turn on or off the radiators and open windows..... buy you pay the same as everyone else regardless of if your radiators are on or off.

So what we have is a de-nationalised national power network.....
Somehow we (the UK) need to supply the raw materials to someone who can create power and supply gas.....

In Norway there is no such thing as domestic gas.... heating is all electric. This is of course hugely expensive but the Norwegians (Nationalised Companies) sell oil and gas on the spot and futures markets and subsidise the electricity!

This is why we (the UK) cannot live (to our current standards) without energy trading.

Energy Trading is the only known way to ensure supply of heat/power to the UK as it has developed in the last 50 years post denationalisation



Hurting the power companies only ever gets passed on to the consumers.... because hurt them enough and they will not sell gas/electricity in the UK. This is why we have the big 6..... because the scale is such that competition can only occur in localised areas. We are stuck with denationalisation.... be that good or bad and the legacy it has left.

We had perfectly viable coal deposits in the 80's and had we spent money trying to make coal 'clean' I'm sure we would be in a completely different position today......

Was public opinion about Nuclear more educated we would be in a different position....

But we are where we are..... Energy Trading is imperfect and open to corrupt practice by its very nature but its required .....

I could list a whole set of complaints that the energy industry has about how it is treated unfairly..... from windfall taxes to changing the way 20 year investments such as a oil platform are taxed after making a billion £ investment......

(In Denmark the production tax rate for a field is set for the life of the field, in the UK the government can change it making some fields uneconomic but as huge liabilities). Not only do energy companies have to risk the government giving them a liability in tax or landing a windfall tax on profit destined for reinvestment they also have to live with the natural uncertainty of the market price of the commodities and FOREX.

This is already costing UK consumers..... BG Group have signed a deal to supply CNOOC (Chinese company) with LNG at a discounted rate for 15 years..... they do this because its one uncertainty they can reduce.... the knock on effect is to answer the consumer question that chinese consumers (but mostly industry) will get cheap LNG at the expense of UK consumers.

This LNG is off the spot and futures markets thus affecting them far more than the fractions of pence per kW. I suppose UK consumers and the chinese post service will benefit as this transposes in cheap items manufactured in China with the loss of UK jobs supplying eBay shops with cheap (if shoddy) goods.

backfoot

I was referring to the Heron trade collection process as not surviving. It just doesn't seem robust enough.

You have certainly widened the discussion with your well written post.

MillicentBystander

Steve_L, it's MSE policy that people who derive their livelihood from the subject being discussed make it clear that is the case so that your posts can be judged taking into account that very important info. Which is not to say i believe what you are posting isn't truthful/useful but it's just good ethics to make it clear from what angle you are approaching this subject.

macman

So we can't blame Jimmy Savile for retail gas price increases then? Shame.

steve-L

MillicentBystander wrote: »

Steve_L, it's MSE policy that people who derive their livelihood from the subject being discussed make it clear that is the case so that your posts can be judged taking into account that very important info. Which is not to say i believe what you are posting isn't truthful/useful but it's just good ethics to make it clear from what angle you are approaching this subject.

I work for a consultancy, my specific expertise is in upstream, as far away from customers as its possible to be in an energy company.

So to be clear the energy companies are clients of my company. Their performance or lack of has no impact on my livelihood (there will always be another to fill their place) indeed changing the Heron process would be good for my company..... it will doubtless generate business for MY company... but I won't see any of it more importantly I am a consumer..... .... this will affect me as the costs associated with it get passed on to ME!

On a personal note, changing this might reduce the UK's role and cause a shift of companies to other geographies. (like when they increased DERV tax and we lost haulage firms to Belgium and when British Airways threatened to relocate to Ireland over tax changes.....

Regardless I will have work ..... I just have to travel further and more often and spend less time with my family!

I previously worked in several international energy companies, I no longer do.

I have posted links where I could you can read yourself.....
My reading of them and a lot of others leads to my conclusions.....

techspec

Will Blair and Brown be investigated - to ask why the removed the annual price cap that saw prices go up by 15% instead of 1.5 - 3%?

Terrylw1

MillicentBystander wrote: »

Steve_L, it's MSE policy that people who derive their livelihood from the subject being discussed make it clear that is the case so that your posts can be judged taking into account that very important info. Which is not to say i believe what you are posting isn't truthful/useful but it's just good ethics to make it clear from what angle you are approaching this subject.

There are lots of insiders on this board, some declare, some (like me) don't. Since social media policies exist to monitor employees these days, its perhaps safer not to give too much away.

Given everyone is using fake names and there is no way to verify anyone's experience anyway it can be irrelevant plus being an insider doesn't make you correct about anything. So, if no one is selling, I guess we have to determine whether the information is correct by using it or determining it to be illogical.