Wednesday 9 November 2011

Gas: An Interesting Development

Ofgem, it seems, is instructed to report on whether "further action is needed to ensure that medium- to long-term gas supplies for consumers remain secure".

Given the signal success of the free market in supplying our gas since we became a net importer in 2004, this sets alarm-bells ringing in Capitalism Towers - but a positive outcome might also result.

First alarm: is this part of a campaign of denigration? Gas - sounds nice but it's running out, and comes from nasty places like Russia.

Cui bono ?
The nuke and renewables lobbies who would have us turn our backs on the only proven positive way to reduce CO2 emissions in a country like the UK, namely by replacing coal-burning with gas burning. (The other way - recession - is pretty effective but not terribly constructive.)

Second alarm (paranoid ? me ?): is "
further action needed to ensure ..." code for more subsidies? It usually is: and from the same DTel article:

"Separately, the regulator said yesterday that it plans to strengthen the incentive system for suppliers to deliver adequate gas supplies if a gas shortage occurs."

Cui bono ? We've fingered Centrica - regular little bung-hunters of late - hoping for newly-minted subsidies to gas companies last year: and they are not the only gas company in town.

But on the positive side ... it is going to be hard for Ofgem to ignore the potential of shale gas. This, of course, goes a lot further than 4,000 holes in Blackpool, Lancashire: because even if we are slow off the mark, others in a whole range of countries will be fracking with a will, and the quantities are market-moving wherever they come from. We know this because US shale production has already moved the markets - theirs, and ours.

Cui bono ? All of us !

So - roll on May, when Ofgem must report. Perhaps by then we'll have a new ... there I go, wishful thinking again.



Mark Wadsworth said...

"Separately, the regulator said yesterday that it plans to strengthen the incentive system for suppliers to deliver adequate gas supplies if a gas shortage occurs."

Isn't the incentive that in a shortage situation, prices go up? Does that not incentivise suppliers? It strikes me that the whole pan-continental pipeline thing is working very well on a practical, engineering level, so the problem is that Russia happens to be the monopolist, but even a monopolist is subject to market forces.

But hooray for shale gas nonetheless.

Elby the Beserk said...

Yes but we have the arch idiot Huhne to deal with, who was dissing Shale in the DT yesterday. Where are the CPS when you most need them? Huhne needs to be removed (forcibly if necessary) from having anything to do with energy whatsoever - the man is a menace who would see old folk die rather than compromise what I guess he calls his "principles".

I gather Panorama the other night had a programme fingering govt policy for our out of control energy prices. The BBC! Can you imagine?

Try and post again. It seems my memcahe value is null for form restoration. As an ex programmer, I have to say, the production of useful error messages is an art unknown to most of the clan. The first system I worked on, back in the very early 80s, produced hex error messages, such as "Error AB45". There was a help program to look these up, which if the error code did not exist in it's list, said "You tell us and we'll both know".

Anyway, lets try again.

Nick Drew said...

glad you persisted, Elby

yup, Panorama was OK (see earlier post) so the predictable Grauniad outpouring is quite fun: seems the prog producer was in quite good odour with the red/greens for his previous works, so there is much wailing & gnashing of teeth, how could he ? etc etc

Mark, yes the whole of the last decade is a wonderful endorsement of the (gas) Market in Action:

- everyone knows the UK is going to need imports some time in the decade

- lots of ordinary energy companies invest in LNG import facilities and new pipelines (from Norway and Holland), no govt money or under-the-table subisidies involved

- UK starts to need imports in 2004

- gas arrives in pipelines and LNG ships, from many different countries, right on cue

QED - what more does one need to say ?

bugger, I have just realised a much better way to conclude this post, I am going back in again

edit edit

Dick the Prick said...

The Bereszovsky v Abramovich err..thing is nice when elections are posted next year. Absolutely fascinating. Berlusconi resigned yesterday and Newsnight went on phone hacking for yesterday's entire programme and tonight some lass failed to take drugs.

Blackpool, to be fair, is valued a bit higher than book price. Can't believe some dumb doylen buys a footie club without being gangsta wannabee.

Budgie said...

"the only proven positive way to reduce CO2"

Why ever would we want to do that, ND? CO2 is a trace gas (0.04%) in the atmosphere, absolutely essential for life on our planet.