tag:blogger.com,1999:blog-32841798.post3966514416373955940..comments2024-03-28T22:45:51.014+00:00Comments on Capitalists@Work: Gazprom: On The Back Foot (Again)CityUnslickerhttp://www.blogger.com/profile/15929544047783163175noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-32841798.post-16531201446814159282015-10-15T22:56:44.630+01:002015-10-15T22:56:44.630+01:00not once you have settled for gas-gas indexation, ...not once you have settled for gas-gas indexation, James - the only reason for not doing this is irrational <br /><br />anyone who <i>really</i> wants to buy on an oil index can easily do a financial swap (ditto any other desired pricing basis)<br /><br />gas-gas is entirely neutral and allows everyone to go their own ways - gas-oil is at best an historical anomaly with inbuilt inefficienciesNick Drewhttps://www.blogger.com/profile/13670594203660051701noreply@blogger.comtag:blogger.com,1999:blog-32841798.post-43257053726188402972015-10-15T18:11:07.663+01:002015-10-15T18:11:07.663+01:00Yes but all things come around, Nick.Yes but all things come around, Nick.James Highamhttps://www.blogger.com/profile/14525082702330365464noreply@blogger.comtag:blogger.com,1999:blog-32841798.post-69203598856992329852015-10-15T14:08:45.834+01:002015-10-15T14:08:45.834+01:00No, it's indexed to spot pricing - in the pric...No, it's <i>indexed to</i> spot pricing - in the pricing formula under a secure long-term contract. For the most part (excepting periods when they are at war with Ukraine, commercially or indeed militarily) Gazprom has been an ultra-reliable export supplier, more so than (say) the Dutch, who interrupt exports at the drop of a hat to prioritise suppliying Dutch customers<br /><br />Of course, if spot gas becomes scarce, the spot price will spike up accordingly and this will be reflected in the price formula. However, experience shows that, taken over a long period, it tends to works out cheaper on average to buy spot (or spot-index) than to buy at fixed price (- you are paying the "hedger's premium") or indeed oil-indexed price <br /><br />also, if (as a wholesale / large industrial buyer) you are 'exposed' to spot price spikes it incentivises you to cut demand during spikes, making your effective average even better against other forms of pricing, which won't spike to the same extent<br /><br />(well, unless you buy indexed to electricity price ...)Nick Drewhttps://www.blogger.com/profile/13670594203660051701noreply@blogger.comtag:blogger.com,1999:blog-32841798.post-185214038762575402015-10-15T13:56:27.646+01:002015-10-15T13:56:27.646+01:00Spot pricing of course goes with spot availability...Spot pricing of course goes with spot availability. In the event of a severe European winter, things may look rather less rosy for customers than they do now.Anonymousnoreply@blogger.com