The Coming Dark Age - Revisited

I did not know whether to laugh or cry when I read these articles in the Independent today (HERE) and (HERE) In these articles the outgoing head of OfGem moans about the looming "Energy Gap" and inevitable price hikes that are on their way. Evidently, we are now so far down the road the only option we have to potentially avert the crisis is to build gas plant using expensive imported gas.

Dare I point out that I first blogged about this in 2010 ( HERE ) and I was a long way from being the first. In the industry this has been an issue for the last 10 years. Both of the last governments (but particularly the last Labour administration) are guilty of letting this drift. Due to the time scales the looming energy supply catastrophe can only now be potentially offset by gas - whatever the cost.

That AND possibly keeping old and decrepit coal plant running.

What a state to get into.

All because vacuous politicians have preferred to pursue the fools gold of renewables and simultaneously shun new nuclear.

But nuclear companies are no different than any other large ruthless corporate entity. Worldwide today, it is a lucrative sellers market for nuclear manufacturers. So now, when we are at or past crisis point the politico's are being held to ransom. The nuclear companies are demanding their pound of flesh. What a turn around.

We are told that "power cuts are unlikely" This is almost certainly just more wishful thinking.
Our generation capacity is going to fall to almost parity to what is needed. Any outage is going to stretch things to breaking point. A large outage in a serious cold snap or a double break down is going to see serious and widespread blackouts.

What will the politico's do? I reckon they will try and wing it. They will hope for mild weather and no breakdowns. God help us all.

This is terrible.

All of that money! All of that national resource wasted on the useless unreliable wind. All of the prevarication and navel gazing over nuclear and shale gas. All of that "Do Nothing and Hope It goes away" attitude.

At best the end result will be a stretched and unreliable power supply dominated by ancient coal and expensive imported gas, with wind adding little but a feel good factor for the technically illiterate.

Of course there will a diminishing contribution from our old first generation nuclear plant as well.
Inevitably this is going to be forced into an ever extended lifespan and run flat-out just to save the asses of our great and good.

What a waste. What a scandal.

UK Gas Prices: The Rip-Off Continues

So, as the dust settles over the last gas price rise we can look back and see if the reasoning behind it was sound.

As I remember the last price rise  (of around 10%) was to....

• Cope with rising wholesale prices,
• Pay for some unspecified rise in costs associated with gas transport
• Pay for renewal of capital equipment.

It was (I am told) absolutely nothing to do with raising huge and unreasonable profits.

Hmmmmm

Wholesale prices

Look at this graph.

(graph from Catalyst Energy Solutions. Here)

The graph looks a  bit of a dogs breakfast because it show several years of wholesale (or spot) gas prices. Each colour is for a different year. Notice that the wholesale price to when the graph ends (Oct 2012) is little changed since December 2010.

So even from this you have to ask: Why the price rise? But look back further. Notice the whole sale price COLLAPSED at the end of 2009, so the rise they keep droning on about actually arises from a large price decrease in 2009. Wholesale prices in Oct 2012 are not much different to Jan 2009.

So, has the gas price today in January 2013 massively risen since the end point on the graph (Oct 2012) ?

No. The wholesale price today  is much the same as the end of October which is much the same as January 2009. But it gets worse. If you go even further back, beyond this graphs resolution you find the wholesale gas price was similar or higher than today way back to March 2008. (see future post)

Of course, wholesale gas only accounts for about 55% of the retail price anyway. So if the wholesale price is flat, then to get a retail price rise of 10%  the price of gas transport and customer servicing must have risen by 22%. Wow!

Even though these companies then go on to whine about making large capital investments they still manage to produce an enormous, and rising year on year profit. Clearly the concept of using your profits to invest in the future is alien to the Utilities.

Why can they do this? Because rather than operating as competing companies, their operation looks more like that of a cartel. They pretend to compete yet actually protect their combined markets at the cost of the consumer, and the government lets them get away with it.

The words “arrogant rip-off” come to mind.

Gas: Excess Supply but Retail Prices Still Rise.

I picked up an interesting little snippet from Reuters today on Yahoo  see This Link

Looks like that in Europe there is a 10% oversupply of natural gas. Meanwhile the Utilities are still hiking their prices to the consumer.

[quote]
At projected import, domestic production and consumption levels, the EU's gas market will have 50 billion cubic metres (bcm) more excess supply in 2011 than it did last year, and the system is likely to remain similarly long in 2012,
This compares to an EU consumption of 492.5 bcm in 2010, according to BP, and to more than France's annual gas consumption of 47 bcm, and only slightly less than Britain's 57 bcm production in 2010.
This year and next year are likely to see an import and domestic production excess above consumption of just over 60 bcm.
[unquote]


Every single per-centage rise in energy prices pushes another 40,000 households into fuel poverty. Most of those households will be pensioners and the poor.

So why did the utilities successfully get away with their recent price hikes?

Because they could.

Why didn't the regulator (Ofgem) veto these rises?

Because it is a self-serving, toothless bureaucracy, incapable of regulating a bag of sherbet let alone a greedy cartel.

Why didn't the Government act?

Oh Come On. Get a grip and don't be silly. The government is part of the cartel. They want prices to rise.

In any normal market an over supply means prices should fall.

So are you expecting your bill to drop as quickly as it went up?

Don't hold your breath.

And particularly don't expect Huhne or any of the other buffoons to do anything about it.

British Gas - Won't Get Fooled Again

So, my grubby little English mates. Some of you have just got shafted by our friends (of whom we have none) in British Gas.

A 7% rise non the less.

I heard their spokesman whinge on about wholesale gas prices going up. He did not mention the year on year BG profit rise of 98% (yes nearly doubling year on year - see here

Neither did he mention that in the last couple of years, wholesale gas prices have fallen massively from their peak in 2008 (see here)

Needless to say, I expect the other festering corporate monsters that inhabit the Gas and Electricity sector are greedily eyeing your pay-packet as you read this.

What we need here my grotty, snotty fellow little Englanders is either a little less of the bloated monopolistic suppliers running their cosy cartel or more regulation. More regulation, as you probably know is something I would wish to avoid.

Personally I'd go for encouraging another twenty or so companies into the energy market, give them some tax breaks to get them going.

Make the bastards actually compete with each other . Oh how that would hurt!

Get some real competition into a market that currently has all the hall-marks of an ugly and malign Cartel

Gas Price Cuts: It Must Be Spring!

Billothewisp suspects our great and illustrious masters have much more pressing problems than worrying how much the plebs get ripped off by gas companies. After all winter is now nearly at an end and there is an election in the air.

Funny though it may seem, those wonderfully honest and non exploitative gas companies are all announcing cuts to the price of their gas, just as the daffodils start to poke their little yellow heads up through the frost. (See Here)

What a wonderful surprise for the general riff-raff who have been hammered by massive and unwarranted bills over the last six months.

What a coincidence though that the cheap gas will only come on tap as the temperature rises and the demand goes down. Such a pity for the average peasant who just won't need the gas, just as the price becomes less expensive..

Only a cynic would guess that the closeness of spring and summer could be the driving force for the downturn in the price. Only an even bigger cynic might well suspect the prices will go back up again come October, just as the demand rises.