[noemon]

Fine, we will agree to disagree in a sense that overall that saves me money by making the process cheaper. (My opinion) Sure it creates spikes that are uncomfortable. Same way as with energy payments in Estonia. There are two market contracts one is with fixed rates and another is with market rates. Fixed rate contract usually has higher rates by 20%+ if not more. I have been on market rates since forever and have saved tons of money by paying less and me whining about this december and january is stupid since this kinda ignores that other many, many years that I paid cheaper and saved a lot overall.

That is for personal use, for commercial use it's the opposite. Fixed rates are on average 50% lower than variable "market" rates. The variable market rate is always higher than the fixed rate because under a variable rate one is free to leave the company, for fixed rate you sign 1,2,3 or 5 year long contracts.

If we lay down our energy contracts here, you will realise you are being duped by the "market" in a very big way.

For commercial energy current fixed rates offered:

Electricity: 45p per kw/h
Gas: 19p per kw/h

For commercial energy current variable/market rates offered:

Electricity: 55p per kw/h
Gas: 29p per kw/h

For personal use fixed rates:

Electricity: 65p per kw/h
Gas: 45p per kw/h

Last years fixed rates agreed for commercial use:

Electricity: 8.7p per kw/h
Gas: 3p per kw/h

As my contracts run out in May(for both gas and electric), I have been negotiating energy prices all day today, Friday and will be doing the same next week Monday. We burn 300k(yes that is 300 thousand) kw/h units per year on natural gas alone. Do the math.

2 weeks ago, it was savage.

These price differences are not down to normal supply/demand side of things, but down to speculation to a potential level of 99%.

[Pants-of-dog]

Once again, no. It is a question of global trade. If you use a commidity that is globally traded then your local supply and demand means very little. The companies simply have no choice but to increase prices to prevent shortages for the local market. If your oil stays cheaper then eveyrbody outside will mass buy it until there is a shortage. You can't just work over local supply and demand while ignoring global supply and demand if you are connected to that global market. You are not North Korea.

I think simply saying "supply and demand" is way too simplistic. Even places like Alberta are dealing with high prices despite Alberta's huge stockpiles (i.e. stable supply) and no increase in demand.

[Steve_American]

In a very vague sense perhaps. This has nothing to do with the simplistic understanding though. There is a whole market for this called the futures market the basic idea of which is that you buy oil now and want to sell it pricier or cheaper depending on what you bet on.(You sign a contract that you buy oil now and sell it at x date for whatever the price may be) Well usually pricier so since this market exists as a financial instrument and a legit financial instrument at that then it is very reasonable for the price to grow irrelevant of anybody's wishful thinking or just blaming it on speculation.

Investopedia wrote:

In October 2020, the next month’s futures contracts—November 2020—are selling for $40.253 The following month’s—December 2020— is at $40.53; January 2021 is $40.88; February 2021 is $40.22; and at some point, two years from now, oil prices (or at least, oil prices as predicted by the level of futures contracts) are predicted to hit $43.46 a barrel. Nor does the rise stop there. Beyond the two-year mark, oil futures settle less semiannually or even annually, rather than monthly. The latest available contract, for 2031, sells for $50.34.

This quote implies that the seller doesn't need to but the oil and hold it for months or years, he can buy it later, even on the delivery date of his sale. This is so because nobody is going to store oil for 10 years to sell then.

.___________________________________________.______________________________

I think simply saying "supply and demand" is way too simplistic. Even places like Alberta are dealing with high prices despite Alberta's huge stockpiles (i.e. stable supply) and no increase in demand.

I think you don't understand how the global market works. A corp that owns some oil in Alberta can sell it locally or it can sell it globally. If the global price is somewhat higher than the local price, corps are driven by their responsibility to their shareholders to make the most money possible.
. . . Therefore, the local buyer needs to bid close to the global price. Any amount lower due to shipping costs.
.

[JohnRawls]

That is for personal use, for commercial use it's the opposite. Fixed rates are on average 50% lower than variable "market" rates. The variable market rate is always higher than the fixed rate because under a variable rate one is free to leave the company, for fixed rate you sign 1,2,3 or 5 year long contracts.

If we lay down our energy contracts here, you will realise you are being duped by the "market" in a very big way.

For commercial energy current fixed rates offered:

Electricity: 45p per kw/h
Gas: 19p per kw/h

For commercial energy current variable/market rates offered:

Electricity: 55p per kw/h
Gas: 29p per kw/h

For personal use fixed rates:

Electricity: 65p per kw/h
Gas: 45p per kw/h

Last years fixed rates agreed for commercial use:

Electricity: 8.7p per kw/h
Gas: 3p per kw/h

As my contracts run out in May(for both gas and electric), I have been negotiating energy prices all day today, Friday and will be doing the same next week Monday. We burn 300k(yes that is 300 thousand) kw/h units per year on natural gas alone. Do the math.

2 weeks ago, it was savage.

These price differences are not down to normal supply/demand side of things, but down to speculation to a potential level of 99%.

It is not fair to compare consumer and producer/industrial prices for utilities since they are different categories all together. Producers consume loads compared to an average household irrelevant of its size. So producers of electricity lets say have an interest to sign a long term fixed contract with them instead of using market rates when they can just withdraw at any time. Hence it is cheaper for producers in that regard. There are different risks involved basically. The average joe as 1 person is kinda irrelevant in the large scheem of things and becomes relevant as a large collective of households i guess.

When it comes to producers:
1) Fixed rates and date contracts oblige you to consume which might be a miscalculation on the producer side. Nor does it allow you to easily switch to a different provider. Hence its cheaper.
2) Market rates do not carry that risk so they are pricier.

For the average joe:
1) He will consume either way the electricity. So there is no risk of overconsumption that might not be needed.
2) Volume are just miniscule compared to any producer.

@Steve_American

A futures contract in its essense is a buy and sell obligation. You buy on x and sell on y. There is a certain period between x and y when the oil has to be stored probably outside of oil producer ground and not yet in the buyers storage. Both dates are probably somewhere in the future and not now, hence the name futures contract. But saying that storage is not involved at all is faulty. Remember the time when the FUTURES oil prices became negative, basically people were paid to get futures contracts? Why did you think that happened? Was it not because the storage capacity in Europe and US was almost exhausted at start of Corona and people were paying others to take oil off their hands to store somewhere?

Read up on the situation in april/may 2020 if i remember correctly or 2021. Or just google negative oil prices futures. Here: https://www.google.com/search?q=negativ ... ve&ssui=on

[JohnRawls]

I think simply saying "supply and demand" is way too simplistic. Even places like Alberta are dealing with high prices despite Alberta's huge stockpiles (i.e. stable supply) and no increase in demand.

Your ignoring basic rules of economics. If the price is low then the demand will be super high for that product. Basically the lower you put the price in x good/category compared to others, the more you will drive demand for that specific brand of good. So there would be a shortage of Alberta oil for Albertans if they don't drive the price higher since any company that has a brain would just come to Alberta to buy that oil for the cheap price + extra a bit but still less than global prices. And the producer would be dumb not to sell it to them instead of Albertans under those conditions. Hence shortage for Albertans...

If we lived in the 1900s then this process would take some time to happen but since technology has moved on then this readjustment happens fast.

[Pants-of-dog]

I think you don't understand how the global market works. A corp that owns some oil in Alberta can sell it locally or it can sell it globally. If the global price is somewhat higher than the local price, corps are driven by their responsibility to their shareholders to make the most money possible.
. . . Therefore, the local buyer needs to bid close to the global price. Any amount lower due to shipping costs.
.

Your ignoring basic rules of economics. If the price is low then the demand will be super high for that product. Basically the lower you put the price in x good/category compared to others, the more you will drive demand for that specific brand of good. So there would be a shortage of Alberta oil for Albertans if they don't drive the price higher since any company that has a brain would just come to Alberta to buy that oil for the cheap price + extra a bit but still less than global prices. And the producer would be dumb not to sell it to them instead of Albertans under those conditions. Hence shortage for Albertans...

If we lived in the 1900s then this process would take some time to happen but since technology has moved on then this readjustment happens fast.

Not quite.

For various technical reasons, Alberta cannot sell to the global market quickly enough to cause a local lack of supply. Lack of pipelines, extra refining steps, et cetera.

Alberta has the capacity but currently does not have the means to fill the gap if Russia stopped selling gas to the world.

[JohnRawls]

Not quite.

For various technical reasons, Alberta cannot sell to the global market quickly enough to cause a local lack of supply. Lack of pipelines, extra refining steps, et cetera.

Alberta has the capacity but currently does not have the means to fill the gap if Russia stopped selling gas to the world.

But it can ship that oil to other places in America and Canada and then sell it from there and so on. The logistic options are not that limited for America/Canada as it is lets say for Russia who can't really ship the European gas and oil to China. US has a lot of capacity in this regard.

[Pants-of-dog]

@JohnRawls

Yes, and the projected tine to get all that rolling is about three months.

So if supply and demand were the only variables, we would see a slow increase over that time.

Instead, we see a sharp increase in petroleum prices immediately after the invasion.

Ergo, there are other variables at play as well.

[Steve_American]

@JohnRawls

Yes, and the projected tine to get all that rolling is about three months.

So if supply and demand were the only variables, we would see a slow increase over that time.

Instead, we see a sharp increase in petroleum prices immediately after the invasion.

Ergo, there are other variables at play as well.

Like maybe the greedy corps just upped the price now because they have good cover or a good excuse.

[BlutoSays]

Democrats' Approach to Rising Gas Prices Reveals Their Economic Illiteracy
By Kat Dwyer
April 07, 2022

Inflation is hitting voters where it hurts the most, forcing policymakers to pay attention—and revealing the economic illiteracy of the Left.

Rather than acknowledging that reckless fiscal and monetary policy are to blame, Democrats have turned to their favorite boogeyman to explain the sharp increase in prices: corporate greed. From “big poultry” to “big oil,” Democrats are eager to scapegoat their harmful economic policies.

This week their political theater is on full display with Democrats dragging oil executives before the Energy and Commerce Subcommittee on Oversight and Investigations to determine what’s driving up the price at the pump and why these companies haven’t expanded production.

Subcommittee Chair Diana DeGette (D-Colo.) explained the purpose for the hearings in a statement: "We want to know what’s causing these record-high prices and what needs to be done to bring them down immediately."

Is she kidding? By now, the reason should be obvious.

Inflation is ultimately the result of expansionary monetary policy. In response to the Covid pandemic, the Fed dramatically increased its quantitative easing program and kept interest rates near zero, both of which flooded the economy with money, expanding the money supply by 40 percent over the course of the past two years.

At the same time, the government’s fiscal policy was also stimulative, with a gush of transfer payments that further goosed demand. These two approaches combined over stimulated demand in the market at a time when supply had been seriously hampered because of the pandemic and the government’s draconian response to it. The result? A classic inflationary tale of too many dollars chasing too few goods.

Government-mandated lockdowns decimated demand during the pandemic bringing the price of Brent crude down to $0 a barrel. Once government restrictions began to lift and the economy began to rebound, demand for oil surged. Suppliers have been trying to play catch up ever since.

Likewise, the Biden administration from day one has clearly communicated its goal to phase out fossil fuels — from canceling the Keystone XL pipeline and pausing federal oil and gas leasing, to setting net-zero goals and making controversial anti-fossil fuel nominations. The industry would be stupid not to internalize this message. Why would they invest in new oil and gas exploration or pipeline construction with the amount of uncertainty their industry faces? Naturally, Democrats obscure the connection.

Expanding production requires capital investment which requires some level of confidence that policymakers won’t throw sand in the gears of your operation. Perhaps the Democrats' climate messaging has been nothing more than political red meat for its voter base, but in the real world, words have meaning, and telling an industry that your policy goal is to make it obsolete doesn’t encourage new investment or growth.

To further illustrate this point, a recent survey by the Federal Reserve Bank of Dallas found that 59 percent of oil and gas executives said pressure from investors is the primary reason major companies are restraining production growth. In a similar vein, White House National Climate Advisor Gina McCarthy recently stated, “[U.S. climate policy] is not a fight about coal anymore. It is a challenge about natural gas and infrastructure investments because we don’t want to invest in things that are time limited. Because we are time limited.”

Gee, I wonder what’s spooking investors?

Others are taking a different, though equally backward approach. The "Big Oil Windfall Profits Tax Act," introduced by Sen. Sheldon Whitehouse (D-R.I.) and Rep. Ro Khanna (D-Calif.), would put a 50-percent-per-barrel tax on the difference between crude oil prices and the average between 2015 and 2019, with revenues returned to consumers as a rebate.

Not to be outdone, Socialist Bernie Sanders has proposed the "Ending Corporate Greed Act," which would slap a 95 percent tax on excess profits of corporations with more than $500 million in yearly revenue. Sanders noted that had this act been in place last year, Chevron Corp. would have paid an additional $12.9 billion in taxes.

Now, one could rightly argue that this is a craven political move meant to appease key constituents ahead of the midterm elections, motivated solely by cratering poll numbers. But something more harmful is afoot here. Increasing the tax burden on these companies will increase costs, which they’ll pass on to consumers in the form of higher prices. Meanwhile, flooding the economy with more government-issued checks will further stoke demand, which will, in turn, exert upward pressure on prices.

Others on the progressive left have called for price controls or more stimulus checks or antitrust action. All of these ideas would just exacerbate the problem. A better solution would be to tighten the Fed’s loose monetary policy, reduce the tax burden, and untangle our ever-growing web of regulation, but don’t hold your breath for such logic to prevail. It’s unsettling to see serious calls for such harmful and economically illiterate policy proposals. But what do we really expect? After all, it’s what the government does best: propose backward solutions to problems it created in the first place.

Kat Dwyer is a Young Voices contributor and co-host of the Whiskey Bench podcast. Her writing has appeared in the National Review, Washington Examiner, and others. Follow her on Twitter @KatJDwyer.

https://www.realclearenergy.org/article ... 825805.htm

[Pants-of-dog]

@BlutoSays

Gas prices have increased everywhere, not just the USA.

The argument that high gas prices are due to Democrat policy would imply that Democrat market policy affects the entire world, and not just the USA.

Unless you can explain how the economy of, for example, Alberta is affected by Democrat fiscal policy, then you cannot explain how gas prices have risen so dramatically here by using Democrat policy as the reason.

[BlutoSays]

Executive order 13990, 14008 and Biden signed to please the tree huggers into forcing alternative energy that the free market doesn't naturally accept. AKA Central Economic Planning.

Banned drilling in ANWR, killed the XL pipeline, and a moratorium on the Coastal Plain Oil and Gas Leasing Program. That caused artificial shortages in gasoline and other intended consequences.

That caused prices of gasolineand other products to rise. That caused inflation and prices rising in all sectors of the economy.

[Pants-of-dog]

Executive order 13990 Biden signed to please the tree huggers into forcing alternative energy that the free market doesn't naturally accept.

Banned drilling in ANWR, killed the XL pipeline, and a moratorium on the Coastal Plain Oil and Gas Leasing Program. That caused artificial shortages in gasoline.

That caused prices to rise. That caused inflation and prices rising in all sectors of the economy.

This seems untrue.

Moreover, the cost of global warming will be, or is, far higher than the cost of preventing or mitigating it.

[BlutoSays]

This seems untrue.

Moreover, the cost of global warming will be, or is, far higher than the cost of preventing or mitigating it.

No. This seems VERY true.

[Pants-of-dog]

@BlutoSays

If your only evidence is a picture with a caption, there is no reason to assume your claim is true.

[BlutoSays]

@BlutoSays

If your only evidence is a picture with a caption, there is no reason to assume your claim is true.

I listed Biden's executive orders for you and the consequences. You democrats are a DISASTER.

[Pants-of-dog]

I listed Biden's executive orders for you and the consequences.

Yes, you made a claim.

You did not provide evidence for it.

You have also ignored evidence in this thread showing that your local government (i.e. the US government) is not responsible for gas prices in other places in the world.

You democrats are a DISASTER.

As I said earlier, I think Biden, Obama, Trump, Bush, Clinton and most US federal government officials should he on trial in the Hague for crimes against humanity. If you think one side is a disaster, please note that I think all sides of your government are a disaster.

[noemon]

@BlutoSays

Gas prices have increased everywhere, not just the USA.

The argument that high gas prices are due to Democrat policy would imply that Democrat market policy affects the entire world, and not just the USA.

Unless you can explain how the economy of, for example, Alberta is affected by Democrat fiscal policy, then you cannot explain how gas prices have risen so dramatically here by using Democrat policy as the reason.

Absolutely correct, one must be totally illiterate to be able to tell that energy prices have risen globally and that in the US the rise has been far more modest than plenty of other places.

A cancelled pipeline does not affect current prices and the very very slow transition to greener energy has zero effect on current prices also, if anything the transition to green energy reduces prices.

Executive order 13990, 14008 and Biden signed to please the tree huggers into forcing alternative energy that the free market doesn't naturally accept.

Your ignorance is not argument.

Sweden, Germany and many others are producing more than 1/4 of their total energy requirement by renewables and the energy market has been far kinder to them.

[BlutoSays]

Absolutely correct, one must be totally illiterate to be able to tell that energy prices have risen globally and that in the US the rise has been far more modest than plenty of other places.

A cancelled pipeline does not affect current prices and the very very slow transition to greener energy has zero effect on current prices also, if anything the transition to green energy reduces prices.

Yes, a cancelled pipeline affects current prices. Energy companies react to Washington's moves in advance to protect themselves and since Biden is economically illiterate (like most democrats), his executive orders put a damper on the production of gasoline causing shortages. Why would Biden try to reduce shortages of gasoline by tapping into the Strategic Petroleum Reserves if supply is not a problem (of his own making)?

"the transition to green energy reduces prices." Only in your world. Buy a fifty thousand dollar electric car and save $80 a month! BFD. And those savings will evaporate when there is a short supply of electricity in the future because of higher electricity demands from charging cars. It's clear Washington DC is creating artificial demand through bad policy by whipsawing the public back and forth to shake out any loose change they may have and corporate America is going right along with it. Europe has had bad energy policy for decades and democrats are working to push that utopian collectivism. Central planning dipschittery pushed by "academics".

Your ignorance is not argument.

Sweden, Germany and many others are producing more than 1/4 of their total energy requirement by renewables and the energy market has been far kinder to them.

Really? How has the energy market been much kinder to Germany? Germany was already paying 1.5 Euros per liter. Now they're paying 2.2 Euros per liter. Compare that to the U.S. rise on a percentage basis. It's pretty bad when we're comparing the US to Yurrip.

[Pants-of-dog]

Yes, a cancelled pipeline affects current prices.

I live at the other end of the cancelled pipeline.

If cancelled pipelines caused prices to increase, they should have caused prices to increase several months ago. Much like the cancellation caused the price to drop here months ago.

Your argument only makes sense if we assume that energy companies react to Washington's moves months afterward. to protect themselves.

This directly contradicts your next sentence:

Energy companies react to Washington's moves in advance to protect themselves and since Biden is economically illiterate (like most democrats), his executive orders put a damper on the production of gasoline causing shortages. Why would Biden try to reduce shortages of gasoline by tapping into the Strategic Petroleum Reserves if supply is not a problem (of his own making)?

No, the pipeline cancellation would only have affected production here, which it did not. We know this because oil production outstripped demand at this point and oil companies were paying people to store oil barrels.

"the transition to green energy reduces prices." Only in your world. Buy a fifty thousand dollar electric car and save $80 a month! BFD. And those savings will evaporate when there is a short supply of electricity in the future because of higher electricity demands from charging cars. It's clear Washington DC is creating artificial demand through bad policy by whipsawing the public back and forth to shake out any loose change they may have and corporate America is going right along with it. Europe has had bad energy policy for decades and democrats are working to push that utopian collectivism. Central planning dipschittery pushed by "academics".





Really? How has the energy market been much kinder to Germany? Germany was already paying 1.5 Euros per liter. Now they're paying 2.2 Euros per liter. Compare that to the U.S. rise on a percentage basis. It's pretty bad when we're comparing the US to Yurrip.

You seem to be confusing energy for transport and energy for buildings.