Monday 23 June 2014

One Eye On Oil and Gas Prices

But only the one, because oil really isn't doing very much.  $115 has been breached, but it looks like a bit of a resistance-level for now.  Bullion much the same.  $120 can't be ruled out but the Russians have been pretty quiet on Iraq - in principle (if such a phrase has any meaning in Realpolitik) they should be onside against ISIS, so unlikely to act in ways deliberately to stoke the price of oil, however much it would suit them.

Gas is strategically important too, and the price more interesting recently.  It's been falling steadily since the start of the year (more than just the usual seasonal effect), here and in the Far East, interrupted by a one-day blip last week - a kneejerk on Gazprom's recent action against the Ukrainians.  Then back on its downward path.  Cutting off supplies to one country means, errr, more available for others ...  

Yes, gas is over-supplied right now.  This could change when European coal-fired power plants stop maxing out, as eventually they will: though even some of those are converting to biomass, and of course Germany and Poland are still building more.  So 'eventually' could be a few years off yet.  

Thus, UK energy policy, long predicated on ever-rising gas prices, looks ever more stupid.  Can HMG really be going to sign that crazy nuclear deal with EDF ?  I attended an excellent academic conference on energy last week, and every speaker - most of whom are working on some green-oriented project or other, if only because that's where all the money is - rolled their eyes at the mention of £92.50/MWh (the EDF price before index-linking kicks in):  they all seem to view it as the highest price that will in practice ever be paid for a large-scale electricity supply, along with the next few UK offshore wind contracts of course.  As such, they see it setting a ceiling.  

Even better, of course, it should be seen as a nightmare from which we will all wake up and get on with life on a rational basis. Can the EC please get on with its ruling that the CfD constitutes illicit state aid ?



Blue Eyes said...

I would like to see a rational carbon tax, set at a (steadily increasing but not viscious) level that puts fossil fuels on a gentle sustainable decline and encourages genuine investment in non-fossil electricity generation.

I wonder, if that happened, whether electricity prices would peak as high as EDF's strike price...

I'm all for a dash for gas and fracking in the short term, but it's not a long term solution.

Blue Eyes said...

Also, I would like to see the French get a poke in the eye from the EC over new nukes, now they have got all Miliband over GE / Alstom et al.

Nick Drew said...

whether electricity prices would peak as high

I really doubt it, there is so much gas available + hi-tech coal that could easily afford your tax

the long term future, I'll bet, is based on new-tech solar + storage (+ a few odds & sods locally - hydro, biomass, in-situ gas & coal): everything else is bridging

poke in the eye - agreed ! perhaps if the EC really is pissed off w. Cameron over the drunken one, they will do us this favour ...

BrianSJ said...

Not quite on topic, but good article on end-to-end energy efficiency for cooking

Nick Drew said...

xcellent - thanks, Brian !

having been a soldier, efficient open cooking was once of great (self-)interest: you learn how to operate a good 3-stone fire PDQ (as well as the turf-oven)

surprising how low the microwave scored in that piece: but I strongly suspect it has other big efficiencies over and above what the simple thermal calculation shows

and I'd be interested to know what electric kettle technology was being considered: kettles / low-conductivity plastics have come on dramatically - think of when it took 5 minutes to boil, and the metal kettle would burn flesh, vs now when it takes seconds and you can touch the thing when boiling

Anonymous said...

Re: Too much gas.

I see on the BBC that in California and Hawaii there is so much solar between noon and 4:00 pm that they are actually refusing to sign up more as it would put too much strain on the network.

In addition, as a lot of the panels are leased then any drop in rates paid would mean that the lessees could end up paying for obsolete and unprofitable equipment.

Seems the industry likes "green" consumers willing to sign up for 25 years.

Nick Drew said...

Green's the word

rwendland said...

ND, just looked at the original electric kettle performance report - Table 7, pg 34, is a good summary. The main reason for ineffeciency is their estimate of average wastage from over-filling the kettle (~12% of lifetime energy usage), behind the 60% average generation and distribution loss estimate. They include a kettle manufacturing and disposal estimate, near 7% of lifetime energy usage.

One interesting thing they say, is that some modern kettles burn 1.5W constantly to run LED bulbs and other fancy features. By my calcs, that's around 5% of leccy usage if you run the kettle around 20mins per day!