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Old November 18th 05, 09:11 PM posted to uk.sci.weather
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Default Gas Prices

Lawrence Jenkins wrote:
"Ian Waddell" wrote in message
oups.com...

I understand where you're all coming from - but this is the wholesale
gas price increasing. The price is dictated in the same way as oil -
i.e. by the traders in London (and elsewhere) buying and selling
options on the exchanges.

Now, these people do get things wrong, but generally the movement of
these prices (driven by supply & demand) is due to the data they use in
making their decisions. That is, if wholesale gas prices don't
actually climb in the coming months, these traders lose a lot of money.
So, they must have reason to believe that the price will increase, to
buy this many options in a week and force the market prices up.

This could be due to a couple of things:

1. Data from the supplier stating they plan to increase prices this
winter (without any reference to demand for the stuff)
2. An expectation that consumer demand will soar (cold winter?) forcing
prices up

So, it could just be a scam to prepare us for bad news - or an
announcement of some kind energy policy, but for the
government/energy companies to somehow force prices up themselves, is
slightly too hard to believe.

Ian



Take your points Ian but number two says something to me.



Of course a cold winter has been predicted for the Eastern USA and
Japan, ALL the main users.

--
Keith (Southend)
http://www.southendweather.net

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Old November 20th 05, 12:40 PM posted to uk.sci.weather
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Posts: 1,138
Default Gas Prices


"Ian Waddell" wrote in message
oups.com...
I understand where you're all coming from - but this is the wholesale
gas price increasing. The price is dictated in the same way as oil -
i.e. by the traders in London (and elsewhere) buying and selling
options on the exchanges.

Now, these people do get things wrong, but generally the movement of
these prices (driven by supply & demand) is due to the data they use in
making their decisions. That is, if wholesale gas prices don't
actually climb in the coming months, these traders lose a lot of money.
So, they must have reason to believe that the price will increase, to
buy this many options in a week and force the market prices up.

This could be due to a couple of things:

1. Data from the supplier stating they plan to increase prices this
winter (without any reference to demand for the stuff)
2. An expectation that consumer demand will soar (cold winter?) forcing
prices up

So, it could just be a scam to prepare us for bad news - or an
announcement of some kind energy policy, but for the
government/energy companies to somehow force prices up themselves, is
slightly too hard to believe.

Ian


The regulations state that gas suppiers should have enough gas to meet
demand in a winter of 1 in 50 severity and to meet a 1 in 20 peak day. This
is not the case for this winter as there is an imbalance caused by the
decline in production from existing fields not being met until additional
gas supplies are delivered which includes the importation of liquid natural
gas.

The consequnce of this shortfall is that the seasonal gas storage facilities
need to be used earlier than is ideal. This means that they will be empty
before the end of a 1 in 50 winter. If anyone is really interested they can
go to the National Grid website and read the 10 year statement about gas
supples demand and capacity.

Alan




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