Europe’s energy crisis is not over

[GeoffF100]

One year on, Europe’s energy crisis is far from over:

https://www.vanguardinvestor.co.uk/arti ... -from-over

Over optimism is not justified here. Europe includes us, of course. Indeed, we will probably be hit hardest.

[TheMotorcycleBoy]

I'm personally betting on gas prices rising again in Autumn, when Europe attempts to replenish their winter stocks. I'm thinking there'll supply issues with replacements for Russian gas not being fully implemented, and with a more Republican house resulting in less generosity regarding reserve shipments.

[Dod101]

One year on, Europe’s energy crisis is far from over:

https://www.vanguardinvestor.co.uk/arti ... -from-over

Over optimism is not justified here. Europe includes us, of course. Indeed, we will probably be hit hardest.

This is the view of one investment house. I object to the heading of this post as though it were an 'official' view. No one anyway as far as I know has ever claimed that our energy crisis was over.

Dod

[Nimrod103]

I'm personally betting on gas prices rising again in Autumn, when Europe attempts to replenish their winter stocks. I'm thinking there'll supply issues with replacements for Russian gas not being fully implemented, and with a more Republican house resulting in less generosity regarding reserve shipments.

I thought the whole point of gas storage was to replenish when World prices are at their lowest i.e. during the Summer.
AIUI this was not possible in 2021 and 2022 because Russia (who was supplying most of continental Europe's gas at the time) held back supplies. There were also some unexpected late cold snaps.

Because of low gas storage levels and for strategic reasons Germany was filling its storage during late 2022, which coincided or may even have caused the very high prices at that time. These issues are unlikely to arise during 2023, where German storage will presumably be filled with non Russian gas bought at Summer prices.

[GeoffF100]

This is the view of one investment house. I object to the heading of this post as though it were an 'official' view. No one anyway as far as I know has ever claimed that our energy crisis was over.

So everyone you know agrees with my post title. Energy prices are higher than they were. My post title is a fact. Vanguard has added "far from", but what does that mean? One month, one year, many years...?

[Dod101]

This is the view of one investment house. I object to the heading of this post as though it were an 'official' view. No one anyway as far as I know has ever claimed that our energy crisis was over.

So everyone you know agrees with my post title. Energy prices are higher than they were. My post title is a fact. Vanguard has added "far from", but what does that mean? One month, one year, many years...?

Well in the sense that your heading is fact I would imagine that most intelligent people would agree but it does not get us far does it? The point is that to me, Vanguard's views are just that and really are far from fact.

Dod

[GeoffF100]

The point is that to me, Vanguard's views are just that and really are far from fact.

They would not claim anything else. That article comes from the "Our latest Thoughts" section of their website. If you disagree, let us have some evidence. For what it is worth, I do not believe that Europe will resume buying most of its gas from Russia any time soon. As a result, energy prices will be are higher than they would have been if Russia had not invaded Ukraine.

[TheMotorcycleBoy]

I'm personally betting on gas prices rising again in Autumn, when Europe attempts to replenish their winter stocks. I'm thinking there'll supply issues with replacements for Russian gas not being fully implemented, and with a more Republican house resulting in less generosity regarding reserve shipments.

I thought the whole point of gas storage was to replenish when World prices are at their lowest i.e. during the Summer.
AIUI this was not possible in 2021 and 2022 because Russia (who was supplying most of continental Europe's gas at the time) held back supplies. There were also some unexpected late cold snaps.

Because of low gas storage levels and for strategic reasons Germany was filling its storage during late 2022, which coincided or may even have caused the very high prices at that time. These issues are unlikely to arise during 2023, where German storage will presumably be filled with non Russian gas bought at Summer prices.

Indeed. I guess the concern in that case is given that the sources will be "non Russian" then exactly how cheap will they be.

[Nimrod103]

I'm personally betting on gas prices rising again in Autumn, when Europe attempts to replenish their winter stocks. I'm thinking there'll supply issues with replacements for Russian gas not being fully implemented, and with a more Republican house resulting in less generosity regarding reserve shipments.

I thought the whole point of gas storage was to replenish when World prices are at their lowest i.e. during the Summer.
AIUI this was not possible in 2021 and 2022 because Russia (who was supplying most of continental Europe's gas at the time) held back supplies. There were also some unexpected late cold snaps.

Because of low gas storage levels and for strategic reasons Germany was filling its storage during late 2022, which coincided or may even have caused the very high prices at that time. These issues are unlikely to arise during 2023, where German storage will presumably be filled with non Russian gas bought at Summer prices.

Indeed. I guess the concern in that case is given that the sources will be "non Russian" then exactly how cheap will they be.

I assume non Russian gas is likely to be quite expensive. One could argue perhaps that the Russians intentionally kept their prices very low so as to get Germany hooked on their gas, before launching the Ukraine war. It takes a long time to get new sources of gas for LNG up and running, but nowhere near as long as building a new nuclear power station.

My principal worry is that Western Govts see this as an opportunity to get us used to high energy prices as part of their drive to impose Net Zero. Never let a good crisis go to waste. Which is a quote credited to Churchill, but sounds much more like late 19th Century Civil Service speak to me.

[TheMotorcycleBoy]

I'm personally betting on gas prices rising again in Autumn, when Europe attempts to replenish their winter stocks. I'm thinking there'll supply issues with replacements for Russian gas not being fully implemented, and with a more Republican house resulting in less generosity regarding reserve shipments.

I thought the whole point of gas storage was to replenish when World prices are at their lowest i.e. during the Summer.
AIUI this was not possible in 2021 and 2022 because Russia (who was supplying most of continental Europe's gas at the time) held back supplies. There were also some unexpected late cold snaps.

Because of low gas storage levels and for strategic reasons Germany was filling its storage during late 2022, which coincided or may even have caused the very high prices at that time. These issues are unlikely to arise during 2023, where German storage will presumably be filled with non Russian gas bought at Summer prices.

Indeed. I guess the concern in that case is given that the sources will be "non Russian" then exactly how cheap will they be.

I assume non Russian gas is likely to be quite expensive. One could argue perhaps that the Russians intentionally kept their prices very low so as to get Germany hooked on their gas, before launching the Ukraine war. It takes a long time to get new sources of gas for LNG up and running, but nowhere near as long as building a new nuclear power station.

Indeed. Those new "channels" could take some time to establish and even then may be more costly. I do think that this thread's title is apt.

My principal worry is that Western Govts see this as an opportunity to get us used to high energy prices as part of their drive to impose Net Zero. Never let a good crisis go to waste. Which is a quote credited to Churchill, but sounds much more like late 19th Century Civil Service speak to me.

Possibly.

But so far the energy firms with the cash ain't playing ball:

https://www.dw.com/en/shell-bp-boost-pr ... a-64656800

Matt

[Nimrod103]

But so far the energy firms with the cash ain't playing ball:

https://www.dw.com/en/shell-bp-boost-pr ... a-64656800

Matt

Shell and BP make most of their profits outside the UK so beyond the reach of the UK taxman. Only their UK North Sea production is available for windfall taxes by the UK Govt. The simple fact is that The countries where Shell and BP make most of their profits believe in continuity and stability of relationships, so they don’t impose windfall taxes. In the light of that, where will BP and She’ll invest in future?

[Newroad]

Evening All.

My guess, for what it's worth, is that gas supply will be fine going forwards. Infrastructure like the following coming online will only accelerate.

Germany Opens Floating Gas Terminal at North Sea Port: https://www.ft.com/content/6b241c46-26d8-4f6d-89e9-b570278208f5 From it

"The Esperanza, a specialised ship the length of nearly three football fields, is carrying 162,000 cubic metres of gas, much of it originally from the US — enough to supply 50,000 households with gas for a year. Over the coming weeks it will be reconverted to gas and fed into Germany’s onshore pipeline network ... It contracted five FSRUs, each with a capacity of 5bn cubic metres a year of gas. It also pushed through the construction of new permanent LNG import terminals, one of which will be built in Wilhelmshaven."

The main risk I see - and it's a small one - is sabotage. However, the more diverse these new entry points for gas are, the less effective individual acts of sabotage would be.

What won't happen, certainly now and perhaps not ever again, is for gas prices to fall to pre-Ukraine-invasion levels. Other gas suppliers cannot produce then deliver gas as cheaply to Western Europe as the Russians could. Hence prices will be higher than they were (due to increased cost of production and transport) and lower than they became (as speculation of shortages has fallen and in general continues to do so) IMO.

Regards, Newroad