The big turnaround: how Europe's gas prices fell from €300 to €35 MWh in the span of a year
cross-posted from: https://lemmy.zip/post/2073007
Archived version: https://archive.ph/UhQac
Archived version: https://web.archive.org/web/20230829230925/https://www.euronews.com/my-europe/2023/08/28/the-big-turnaround-how-europes-gas-prices-fell-from-300-to-35-mwh-in-the-span-of-a-year
Any relief we might get as customers - be sure they're still gouging us for record profits.
They've seen just how much they can get away with, they're not going to go back.
Same thing as with food prices at the store. They found out they can get away with reducing the content and doubling the price. This will now go on for conceivably future.
No it's not a good comparison. The bulk food prices themselves are indeed sold on a similar commodity market, but the pricing of packaged goods is marked by companies selling those packaged goods. Oil and gas are sold at the rates bought and sold through futures contracts directly from the producers. You're paying the rate the traders got it for, usually with a regulated mark up. If you're buying from a private utility then you're on your own buddy.
Good lord that isn't how commodity prices work. There's no cabal with complete control over global oil and gas prices. There are groups with varied interests depending on the amount and quality of oil they possess, but even that gets complicated. It boils down to what is on the market and how it's bought and sold on contracts by global energy traders. Yes, OPEC and Saudi Arabia have some power over prices by increasing and decreasing supply on the market, but that's been reduced with how much supply has come online over the years in the US and Canada. Russian supply cuts to Europe had a pretty obvious ripple effect, but after a year or so, supplies and relative demand have shifted. This reductionist take is so tiring and is such an obvious sign of lack of understanding how commodities markets, and quite likely economies themselves, actually work in the real world. It sounds almost as crazy as the right wing conspiracies about global cabals.
This is the best summary I could come up with:
The numbers seemed to be in the grip of an irrepressible force: August 2022 began with the Title Transfer Facility (TTF), Europe's leading hub, trading gas at €145 per megawatt-hour (MWh), an alarming level.
The headline, while dramatic, encapsulated the atmosphere of uncertainty and anxiety – a polite euphemism for hysteria – that characterised the worst times of the energy crunch, an unheard-of phenomenon unleashed by the COVID-19 pandemic and exacerbated by Vladimir Putin's decision to launch a war against Ukraine.
But today, a year later and with the benefit of hindsight, we can: after hitting the €300 MWh ceiling, Europe's gas prices began a steady decline and fell back to double-digit territory.
The drastic turnaround represents one of Europe's greatest feats since the Kremlin ordered its troops to cross into Ukrainian territory and irreversibly transformed the long-established structure of global energy markets.
Although policymakers in Brussels have been quick to congratulate themselves on the geo-economic victory, the key to success lies in an intricate combination of factors, including a milder-than-usual winter that dented demand for heating.
As we turn the tide and leave the panic behind, the expert adds, governments should phase out the massive subsidies they put in place during the crisis and instead focus on targeted support for the most vulnerable sectors of the population.
The original article contains 814 words, the summary contains 218 words. Saved 73%. I'm a bot and I'm open source!
all it cost them was shutting down their industries to use less gas to keep gas prices low
Also this is in the end of summer, when prices are going to be their lowest.
Plus whatever the cost is these days of Russian gas bought from India
For anyone wondering: still significantly above the pre-war price
From a personal perspective, my restaurant energy bill (gas/electric) went from peak season August 1350€ last year to less than 800€. Anecdotal, but I absolutely needed to see lower pricing this year.
From what I understand (I may be understanding little), Saudis responded opposite the western requests and seemingly in coordination with Russia cut output, and have been cutting output. Driving up energy prices and overall inflation. There seems to be some power play happening between the Saudis and Biden if I am reading the news correctly.
Yes, there's an oil war going on between the US and Saudis + Russia.
A lot less catastrophic than what had been announced.
The US was in a good position to take on a lot of these contracts and the Biden administration, despite what the right might think, is actually extracting more domestic O&G than at any point. The shift is also that when oil prices climb high enough it makes shale production profitable enough to actually extract. I don't see how it falls back to pre-war levels but the US can also more than make up for the demand with a high enough price per barrel. I think much under $50 a barrel of NYMEX, most of the US producers stop operating.