It's not often that the National Grid, who happen to amongst other things keep tabs on the gas industry makes headlines. The news that some of the UK's largest energy suppliers held back gas in storage tanks as the 'free market' ran into a serious if not acute gas shortage will not surprise many of the less than dispassionate observers of the expensive farce that passes itself off as the alleged energy 'free market' in the UK. Thanks to the failure to develop a sensible storage capacity of gas and the failure to develop serious serious alternative sustainable energy supplies the UK came within six hours of running out of gas on March 22nd this year.
National Grid, which leases out storage space in it's Isle of Grain Liquefied Natural Gas (LNG) terminal, to Centrica (who own British Gas), BP and other large energy suppliers, noted that the terminal was 40% full on March 22nd. It also noted that the South Hook planet (here in Wales) was 52% full; at a time when a combination of pipelines problems and demand (due to the cold weather) led to a spike in gas prices (which reached 150 pence a therm). National Grid owns and operates the gas storage facility but leases out storage to a number of third party users (including Sonatrach (Algeria) and GDF (France). The implication is that these large energy suppliers were holding back stocks of gas during a time of crisis so that they could profit for the high price for gas.
If nothing else this should make it abundantly clear that the ideologically driven and pretty much unregulated 'free market' for energy has failed abysmally. We need, like Scotland and other countries to develop clean, safe and secure renewable energy supplies. I have come to the stark conclusion that the 'Big 6 energy cartel members have proved entirely focused on driving up profits and have neglected the safety of supply. They should play no part in developing, administering and overseeing any sustainable energy supplies as they will only endeavour to extract as much profit as they can from the process.
Showing posts with label Gas Profits. Show all posts
Showing posts with label Gas Profits. Show all posts
Monday, 27 May 2013
Sunday, 24 March 2013
DON’T PANIC! MR CAMERON…
With temperatures dropping yet again and a problem with one of the major gas (UK - Belgium) pipelines (it may have been closed for 1.4 days) there may well be a faint whiff of panic in the air. What with former (Climate Change) Ministers claiming (in the Radio 4 Today Programme) that the UK is down to less than 36 hours worth of gas supplies, it should be pretty clear by now that any UK strategic energy reserve leaves a great deal to be desired.
With the privatisation of the UK energy sector in the 1980’s it is pretty clear that any provision for future energy planning and provision was abandoned to the whims of the free market. A healthy gas reserve would not only cushion (domestic and commercial) customers from potential shocks, it would also potentially curb the prospects of fat profits on the members of ‘the big 6’ energy cartel. With little prospect of any effective regulation of excessive profits being ramped up it is clear that we are going to continue to get fleeced for a good few years yet.
As of March 2012 around two thirds of UK primary energy demand was met from domestic production. Coal accounted was barely 4% of final energy consumption by fuel in 2010. Almost all UK oil and gas production came from the seas that surround the UK. Peak oil (for the UK) incidentally happened in 1999, and Peak gas production took place back in 2000 - something which may explain the Unionist panic over the prospect of Scottish independence. Since then the UK has moved from a position of relative self-sufficiency to one of dependency on imported oil and gas.
By 2009, imported gas was around 32% of the total gas used. 58% came from Norway, 25% from liquefied natural gas (LNG) from various different countries, 16% came from the Netherlands, and 2% came via the Belgian interconnector pipeline. The increased reliance on imported oil and gas left the UK far more open to supply risks associated with global supply constraints and price volatility. The UK Government periodically punted plans to reduce the need for oil and gas imports, by pushing primary energy production, and by developing low-carbon alternatives such as electric vehicles, biofuels and fuel efficiency.
The writing is not so much on the wall as on TV, one Tuesday evening in February saw a TV first, the first airing of a Gazprom advert on UK domestic television advert – they sponsor the European Champions League. Russia has periodically put the squeeze on gas exports to the Ukraine, (currently some 80 per cent of Russian gas exports to the EU flow through the Ukraine) so the real dangers of relying on imported energy from unreliable sources have been clearly highlighted.
As for gas, some states have made efforts to protect themselves against external shocks to their energy needs; France was able to store 122 days of gas and Germany able to store 99 days worth (2013 figures). Here in the UK the almost entirely market driven approach turned out to be entirely inadequate, the UK has a storage capacity which would last for only up to 20 days (up from 15 days in 2009).
New Labour took the best part of a decade to recognise the need to increase storage capacity and the UK has been playing catch up ever since – and still little has been done to resolve the problem. One consequence of this lack of storage capacity is that UK had to sell gas during the summer and purchase gas again when it is needed in the winter. The Conservative’s headlong dash to gas in the 1980’s was accompanied by a complete if not abject failure when it came to strategic energy planning.
The situation has been made worse by the current Government's decision to somewhat half-heartedly look at developing diverse reliable alternative energy sources whilst pursing yet another dash for gas.
The last New Labour Government and the current Con Dem Government largely ignored repeated warnings that the lack of sustainable energy has set the UK on a path towards higher domestic energy prices and potential power blackouts. Over the next four to six years almost all of our old nuclear reactors, along with nine major coal and oil-fired power stations, will be run down and closed, with nothing ready to replace them.
We are now in the situation where we will become even more dependent upon imported gas from either unstable regions or dubious suppliers. The Con Dem’s solution to was to rush to go Nuclear and to effectively hand the Nuclear industry lock stock and barrel over to French energy companies who are busy paying off large loans to the French government. Anyway that was the plan, although the wheels seem to be still wobbling on that particular wagon as well.
With the privatisation of the UK energy sector in the 1980’s it is pretty clear that any provision for future energy planning and provision was abandoned to the whims of the free market. A healthy gas reserve would not only cushion (domestic and commercial) customers from potential shocks, it would also potentially curb the prospects of fat profits on the members of ‘the big 6’ energy cartel. With little prospect of any effective regulation of excessive profits being ramped up it is clear that we are going to continue to get fleeced for a good few years yet.
As of March 2012 around two thirds of UK primary energy demand was met from domestic production. Coal accounted was barely 4% of final energy consumption by fuel in 2010. Almost all UK oil and gas production came from the seas that surround the UK. Peak oil (for the UK) incidentally happened in 1999, and Peak gas production took place back in 2000 - something which may explain the Unionist panic over the prospect of Scottish independence. Since then the UK has moved from a position of relative self-sufficiency to one of dependency on imported oil and gas.
By 2009, imported gas was around 32% of the total gas used. 58% came from Norway, 25% from liquefied natural gas (LNG) from various different countries, 16% came from the Netherlands, and 2% came via the Belgian interconnector pipeline. The increased reliance on imported oil and gas left the UK far more open to supply risks associated with global supply constraints and price volatility. The UK Government periodically punted plans to reduce the need for oil and gas imports, by pushing primary energy production, and by developing low-carbon alternatives such as electric vehicles, biofuels and fuel efficiency.
The writing is not so much on the wall as on TV, one Tuesday evening in February saw a TV first, the first airing of a Gazprom advert on UK domestic television advert – they sponsor the European Champions League. Russia has periodically put the squeeze on gas exports to the Ukraine, (currently some 80 per cent of Russian gas exports to the EU flow through the Ukraine) so the real dangers of relying on imported energy from unreliable sources have been clearly highlighted.
As for gas, some states have made efforts to protect themselves against external shocks to their energy needs; France was able to store 122 days of gas and Germany able to store 99 days worth (2013 figures). Here in the UK the almost entirely market driven approach turned out to be entirely inadequate, the UK has a storage capacity which would last for only up to 20 days (up from 15 days in 2009).
New Labour took the best part of a decade to recognise the need to increase storage capacity and the UK has been playing catch up ever since – and still little has been done to resolve the problem. One consequence of this lack of storage capacity is that UK had to sell gas during the summer and purchase gas again when it is needed in the winter. The Conservative’s headlong dash to gas in the 1980’s was accompanied by a complete if not abject failure when it came to strategic energy planning.
The situation has been made worse by the current Government's decision to somewhat half-heartedly look at developing diverse reliable alternative energy sources whilst pursing yet another dash for gas.
The last New Labour Government and the current Con Dem Government largely ignored repeated warnings that the lack of sustainable energy has set the UK on a path towards higher domestic energy prices and potential power blackouts. Over the next four to six years almost all of our old nuclear reactors, along with nine major coal and oil-fired power stations, will be run down and closed, with nothing ready to replace them.
We are now in the situation where we will become even more dependent upon imported gas from either unstable regions or dubious suppliers. The Con Dem’s solution to was to rush to go Nuclear and to effectively hand the Nuclear industry lock stock and barrel over to French energy companies who are busy paying off large loans to the French government. Anyway that was the plan, although the wheels seem to be still wobbling on that particular wagon as well.
Friday, 16 November 2012
GAS PRICES AND GAS PROFITS
Here we go again - British Gas - owner Centrica is to raise its average prices by 6% from today (Friday 16th November 2012), they have stated that the price rises are due to costs that are out of its control. Meanwhile Centrica, with 15.8 million customers, says that required investments and measures to meet carbon reduction targets have added about £50 to the average bill. The company, which recently issued a trading update, stated that wholesale gas prices were now 13% higher this winter than last. The company will report its full-year profit figures in February 2013.
Centrica stated that average UK residential gas consumption for the first 10 months of 2012 was 9% higher than for the same period of 2011, while average electricity consumption was 1% lower. On Wednesday (14th November 2012) SSE (one of the UK's biggest energy suppliers) reported a 38% rise in half-year profits. They made £397.5 million pounds profit in the six months to the end of September, this compares with £287.4 million in the same period last year. SSE, along with most of the members of the big 6 energy cartel, raised its domestic gas and electricity prices by an average of 9% one month ago.
Plaid has long voiced its concerns over allegations that the 'Big Six' energy companies have been manipulating wholesale gas prices in an attempt to save millions of pounds. The allegations, brought forward by a whistleblower, are currently being investigated by City watchdog the Financial Services Authority, whose findings could trigger a crisis of confidence in the energy sector similar to that in the banking industry following the rate-fixing Libor scandal. Plaid is concerned that the people of Wales are suffering disproportionately as a result of the 'Big Six' monopoly due to the fact that they're less likely to switch energy suppliers and therefore receive higher bills than anywhere else in the UK.
Plaid Cymru MP Hywel Williams said:
"These allegations against some of the 'Big Six' energy companies are deeply troubling and hold the potential to prompt a fresh crisis of confidence in yet another sector of British society.
"Just as was the case with the Libor scandal where the inter-bank lending rate was fixed, claims that wholesale gas prices have been manipulated raise serious questions over scrutiny and transparency.
"Most of the 'Big Six' energy companies are already under fire having declared intentions to push up their prices before the end of the year. This will see ordinary families having to keep an even closer eye on their budgets while the eldest and most vulnerable face an increasing risk of hypothermia or malnutrition as they're forced to choose between heating and eating.
"It is clear that the competitive market fails the neediest within our society. The Party of Wales believes that utilities should be operated on a not-for-distributable-profit model, like Glas Cymru, where profits are reinvested rather than pocketed by shareholders.
Centrica stated that average UK residential gas consumption for the first 10 months of 2012 was 9% higher than for the same period of 2011, while average electricity consumption was 1% lower. On Wednesday (14th November 2012) SSE (one of the UK's biggest energy suppliers) reported a 38% rise in half-year profits. They made £397.5 million pounds profit in the six months to the end of September, this compares with £287.4 million in the same period last year. SSE, along with most of the members of the big 6 energy cartel, raised its domestic gas and electricity prices by an average of 9% one month ago.
Plaid has long voiced its concerns over allegations that the 'Big Six' energy companies have been manipulating wholesale gas prices in an attempt to save millions of pounds. The allegations, brought forward by a whistleblower, are currently being investigated by City watchdog the Financial Services Authority, whose findings could trigger a crisis of confidence in the energy sector similar to that in the banking industry following the rate-fixing Libor scandal. Plaid is concerned that the people of Wales are suffering disproportionately as a result of the 'Big Six' monopoly due to the fact that they're less likely to switch energy suppliers and therefore receive higher bills than anywhere else in the UK.
Plaid Cymru MP Hywel Williams said:
"These allegations against some of the 'Big Six' energy companies are deeply troubling and hold the potential to prompt a fresh crisis of confidence in yet another sector of British society.
"Just as was the case with the Libor scandal where the inter-bank lending rate was fixed, claims that wholesale gas prices have been manipulated raise serious questions over scrutiny and transparency.
"Most of the 'Big Six' energy companies are already under fire having declared intentions to push up their prices before the end of the year. This will see ordinary families having to keep an even closer eye on their budgets while the eldest and most vulnerable face an increasing risk of hypothermia or malnutrition as they're forced to choose between heating and eating.
"It is clear that the competitive market fails the neediest within our society. The Party of Wales believes that utilities should be operated on a not-for-distributable-profit model, like Glas Cymru, where profits are reinvested rather than pocketed by shareholders.
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