I don't understand the huge price increases when we are not reliant on Russia for gas

artyboy

Vegastare said:

I don't understand the huge price increases when we are not reliant on Russia for gas

This was my query on a previous thread.....it seems what we produce has to trade at world market prices so are companies make profit and they can invest in UK and their shareholder etc

Why we cannot keep our gas at a lower rate for our benefit thus lowering the price to us and the imported gas and electric would still be at a higher price - but we would have some cushioning from our own supply.

Because it is not "our" gas. It is not a nationalised industry where the gas that comes out of the ground is the property of the U.K. state. It is a commercial product, extracted by private corporations, and sold at rates set by demand in the global market.

And please, let's not use that as an opening to get back into the tired old nationalisation debate, because what's it going to be - many hundreds of billions to fund, or Venezuela style eminent domain, and the pariah status that comes with it? You choose.

pochase

jj_43 said:

MrWrighty said:

Around 50% of our gas comes from the North Sea, some from Norway and the rest from other non EU countries. We only ever imported around 3% of our gas from Russia so how come, when we produce our own, we are at the mercy of the huge increases imposed by the energy cap. Add in the enormous profits being made by the energy companies something just does not add up.

its due to our open and liberal energy markets. We have lots of interconnections that are used transport energy to the highest price area, like France, so energy prices are set at international levels. If like the US you had a gas glut from shale, and limited ability to transport the energy, prices would be low. However, even prices are starting to rise in the US as their gas is being shipped to the UK/Europe, produced at low cost and sold here to you at very high prices. Much of this activity is off the back of UK customers, e.g. companies like Centrica/BG arrange trades to purchase this gas from the US at a fraction of UK prices, they then ship it to the UK where it is sold at our very high prices. The midstream activities of these companies pocket the huge profits from this activity. 

And if we would not have the interconnections we would have not enough energy at all, we are net importers, not exporters.

So only the people who could afford to pay the most, would have any energy at all if there is not enough for everybody.

jj_43

Vegastare said:

I don't understand the huge price increases when we are not reliant on Russia for gas

This was my query on a previous thread.....it seems what we produce has to trade at world market prices so are companies make profit and they can invest in UK and their shareholder etc

Why we cannot keep our gas at a lower rate for our benefit thus lowering the price to us and the imported gas and electric would still be at a higher price - but we would have some cushioning from our own supply.

We could keep our gas at a lower rate, it would take some major policy changes and probably nationalisation. An energy bailout. I am sure there will be plenty of comments saying we couldn't do that, but not everyone can think outside their box.

[Deleted User]

I think we could make it look like we were keeping our gas at a lower rate, but that's not the same thing.

pochase

Nationalisation - are you going to reimburse the shareholders or are you going to just take their property like a third world dictatorship?

If you pay them, it will cost many billions, if you just take what you want you will send a warning to other companies in all business areas. Who wants to stay in a country where the government just takes away your property and who wants to be the next?

Chrysalis

The price of using the open market to source energy.

[Deleted User]

pochase said:

Nationalisation - are you going to reimburse the shareholders or are you going to just take their property like a third world dictatorship?

If you pay them, it will cost many billions, if you just take what you want you will send a warning to other companies in all business areas. Who wants to stay in a country where the government just takes away your property and who wants to be the next?

Precisely the reason that SSE? moved their operations into a Swiss holding company when nationalisation was talked about in 2019.

Chrysalis

pochase said:

Nationalisation - are you going to reimburse the shareholders or are you going to just take their property like a third world dictatorship?

If you pay them, it will cost many billions, if you just take what you want you will send a warning to other companies in all business areas. Who wants to stay in a country where the government just takes away your property and who wants to be the next?

You seem scared of capital expenditure for some reason.

Do you think keeping the status quo wont cost billion's, its free?

gt94sss2

mark_cycling00 said:

If only there was some sort of union of European countries that coordinated a response to this problem instead of allowing each country to outbid each other by bunging higher and higher amounts of money to their voters and fight over the dwindling supplies 

The European Union are not really coordinating anything so it's not much help in this context atm.

One of the other reasons for high prices in increased demand from Asia - especially China who are outbidding others to ensure they get the supplies that want.

[Deleted User]

Chrysalis said:

pochase said:

Nationalisation - are you going to reimburse the shareholders or are you going to just take their property like a third world dictatorship?

If you pay them, it will cost many billions, if you just take what you want you will send a warning to other companies in all business areas. Who wants to stay in a country where the government just takes away your property and who wants to be the next?

You seem scared of capital expenditure for some reason.

Do you think keeping the status quo wont cost billion's, its free?

I'd have no problem with CAPEX, or with nationalisation in the system, but I don't think it would fix the present issue.

I'm also not sure which bit of the tree would benefit most from nationalisation (I lean towards the network operators initially) - any thoughts?