UK energy crisis (ish)

[sheddi]

It was briefly mentioned in the "supply chain breakdown" thread but it probably deserves it's own home.

For at least 40 years the UK has been kicking the can regarding energy security and diversity. The largest single source of electricity, and the majority of heat, is from natural gas (NG). NG prices have been low for a long time and the alternatives have all been some combination of polluting (coal), unpopular (nuclear) or expensive (wind/solar).

Well there's now a perfect storm in the NG market. Supplies to Europe from Russia are lower than usual (speculation is that there's a political objection to paying the transit fees to Ukraine), demand in the Far East has risen reducing LNG shipments, and the UK's own gas fields are declining in output. As a result the price of NG has risen somewhat. The forecast last year was that prices might reach 37.6 pence per therm by 2024-25; the price is currently 185 pence per therm, 5x that forecast.

As a result energy prices have soared. Personally, I was paying 2.7p/kWh at the start of the year; I lucked out and fixed on 3.2p/kWh a month ago but prices today are at least 4p/kWh and some suppliers are asking 5p/kWh. Electricity prices have risen by a similar amount, from 12p/kWh to 21p.

As you might imagine some power companies are going bust and the others are finding it quite challenging to trade. This hasn't been helped by the ease of entry to the UK energy market; there are stories of suppliers being set up in people's bedrooms. The UK's 9th largest supplier, with around 1.5 million customers, is a private company with (per its most recent set of accounts) £100 share capital and £98M in liabilities.

As you might imagine, this is causing a certain amount of concern among (a) consumers like me, (b) the remaining suppliers and (c) the UK Government.

The only reason I've put an "ish" in the subject line is that, for now at least, the energy market is working and the regulator seems to have a reasonable handle on things. It's likely that suppliers will continue to go bust but there's still enough energy to go around and consumers are unlikely to be cut off. That could of course change if we have a cold snap or unplanned outages (like the fire at the French interconnector that has taken the equivalent of one large power station off-line).

[Raptor]

With plentiful North Sea oil and gas and then Russian NG it is easy to be complacent about the continuation of NG as a fuel. NG is an excellent fuel source.

Normally I would say that you are witnessing market fluctuations and once the price gets high enough the producers will turn on the spigot.

However the North Sea reserves are very mature and likely to see reduced production. In a normal market there would be independent groups fracking and tapping into otherwise low production fields. The problem though is that the North Sea is one of the most difficult and costly markets to enter. The drilling risks are through the roof and no one in their right mind is going to commit the resources needed to do this. That leaves the existing players BP, RDC (Shell) & Equinor (Stat et. al.) to make a call about risking capital to increase production. There are a lot more extractable reserves but the question is whether or not the extraction process with pay for the NG.

So that leaves the easy answer of buying NG from the Russians until something better comes along. That sounds easy, it is and monetarily it makes sense. BUT and there is always BUT with the easy answer.

If the Russians do something the UK & EU does not like, the NG consumers become a political bargaining chip. The political pressure may aa simple as price increases or temporary distribution "disruptions".

A net energy importer is subject to the pressure of the entity that provides the energy. Energy independence should be a key goal for any country. Granted it is easier to say that than deliver on it in many cases, but it nevertheless should be right up there with secure borders, functioning economy and reasonable self defense capability.

The UK does have the potential for wind energy (also very expensive if you factor in the backup generation capability needed to have this work) and the technical/engineering capability for nuclear power plants to provide the base load.

The question is not capability but rather the desire.
 

   

[The Twizzler]

Maybe I am way off but isn't NG very cheap from the US and didn't the US a couple of years ago create a gas depot in continental Europe . I was thinking it was in Poland?

[Blast]

Another issue is strikingly similar to the power problems TX had last winter, but on a much larger scale. The wind in the EU has stopped blowing, resulting in a large loss of energy. Percentage-wize, much larger than what happened here.

(Bloomberg Opinion) -- Europe has an energy problem, and it could get worse once winter grips the continent. Gas and electricity prices are soaring, windmills are standing idle for lack of wind and shuttered coal-fired power plants are being brought back into use. There are even suggestions to use diesel generators for private generation. But oil isn't the solution to the continent's energy woes.
Read more at: https://www.bloombergquint.com/gadfly/energy-prices-winter-is-coming-and-europe-is-running-low-on-gas
Copyright © BloombergQuint

Looking at windy.com you'll see a big "dead spot" over Europe.
https://www.windy.com/?50.291,32.722,3
-Blast

[sheddi]

In related news, the UK has decided to distract everyone from the soaring prices of electricity and NG by deciding there's also a supply chain issue with diesel and gasoline. It seems there is no shortage of liquid fuels at the refineries and depots; it's just that there aren't enough HAZMAT-qualified truck drivers to keep the deliveries going.

The situation kicked off yesterday when BP and Exxon announced that some of their gas stations would close temporarily because they couldn't keep them supplied. The Gov't promptly announced that supplies were secure, ther was no shortage and prople shouldn't panic buy. The newspapers responded to this reassurance as you might expect:



Today there are queues at gas stations and wides shortages as demand for fuel soars way above normal 

[Raptor]

In the US truck drivers in general are in short supply.

Truck drivers with a HAZMAT and tanker endorsement along with a TWIC card (Transportation Worker Identification Credential kinda like a TSA background check for airlines) can write their own terms. It is not quite as bad as indicated in your post but they are in great demand.

The funny thing is that while wages were rising for such folks recently I have started to see sign on bonuses AND retention bonuses. Sign on bonuses are not unheard of but retention bonuses are new.

Getting a HAZMAT TWIC card is a PITA to obtain and you can be disqualified for many things.
https://www.tsa.gov/disqualifying-offenses-factors

This is an advert from a regional trucking company that supplies fuel to gas stations for a driver. Minimum pay is $85k per year (with company supplied equipment) and they cover all expenses for overnighting.

2 years ago this was a good job but the pay was closer to $50k per year.  This is a respected company in the industry and they are having to pay $5,000 sign on bonuses to attract drivers.

https://jobs.duprelogistics.com/jobs/?r=jobboard&category=company-driver

[sheddi]

We might possibly be at peak panic-buying of gas and diesel. I guess eventually everyone will have a full tank and demand will have to fall?

https://www.bbc.co.uk/news/uk-58707455

Fuel demand should return to normal in coming days, say suppliers

Demand for petrol is expected to return to normal levels in the coming days, easing pressure on station forecourts, the fuel industry has said. In a joint statement, 10 companies, including BP and Shell, said there was plenty of fuel at refineries and urged people to buy it as they usually would.

Earlier, the environment secretary said there were no plans at the moment to bring in the Army to drive tankers. But sources told the BBC that ministers are still seriously considering this.

Meanwhile, doctors and home care staff have called for essential workers to be given priority for fuel.

The Petrol Retailers Association, which represents nearly 5,500 of the UK's 8,000 filling stations, warned on Sunday that up to two-thirds of outlets were out of fuel, with the rest of them "partly dry and running out soon".

But in a joint statement on Monday evening, a group of leading suppliers said: "There is plenty of fuel at UK refineries and terminals, and as an industry we are working closely with the government to help ensure fuel is available to be delivered to stations across the country. As many cars are now holding more fuel than usual, we expect that demand will return to its normal levels in the coming days, easing pressures on fuel station forecourts."

[MPMalloy]

sheddi:  I have 2 questions about English society/culture/???

You got 2 secs?

[sheddi]

sheddi:  I have 2 questions about English society/culture/???

You got 2 secs?

Sure, go ahead - here if they're public, PM if not

[MPMalloy]

sheddi:  I have 2 questions about English society/culture/???

You got 2 secs?

Sure, go ahead - here if they're public, PM if not

During Parliament, someone will be speaking at the podium.  When they are done, there begins a noise.

Not having a Parliament, wtf is it???

no offense

[sheddi]

sheddi:  I have 2 questions about English society/culture/???

You got 2 secs?

Sure, go ahead - here if they're public, PM if not

During Parliament, someone will be speaking at the podium.  When they are done, there begins a noise.

Not having a Parliament, wtf is it???

no offense

No offense taken!

Are you referring to the barnyard noises at 15 seconds in this video? (I don't recommend watching too much of this, BTW, you could end up a monarchist. Or an anarchist, YMMV.)


https://www.youtube.com/watch?v=4AyGT9KC-AU

They're saying "hear, hear" - an expression of appreciation and support.

[MPMalloy]

sheddi:  I have 2 questions about English society/culture/???

You got 2 secs?

Sure, go ahead - here if they're public, PM if not

During Parliament, someone will be speaking at the podium.  When they are done, there begins a noise.

Not having a Parliament, wtf is it???

no offense

No offense taken!

Are you referring to the barnyard noises at 15 seconds in this video? (I don't recommend watching too much of this, BTW, you could end up a monarchist. Or an anarchist, YMMV.)

(ANTI-CONTAGION MEASURE SUCCESSFUL)

They're saying "hear, hear" - an expression of appreciation and support.

No...it doesn't sound good.

[TACAIR]

It was briefly mentioned in the "supply chain breakdown" thread but it probably deserves it's own home.

For at least 40 years the UK has been kicking the can regarding energy security and diversity. The largest single source of electricity, and the majority of heat, is from natural gas (NG). NG prices have been low for a long time and the alternatives have all been some combination of polluting (coal), unpopular (nuclear) or expensive (wind/solar).

2p/kWh to 21p.

(SNIP)

As you might imagine some power companies are going bust and the others are finding it quite challenging to trade. This hasn't been helped by the ease of entry to the UK energy market; there are stories of suppliers being set up in people's bedrooms. The UK's 9th largest supplier, with around 1.5 million customers, is a private company with (per its most recent set of accounts) £100 share capital and £98M in liabilities.

As you might imagine, this is causing a certain amount of concern among (a) consumers like me, (b) the remaining suppliers and (c) the UK Government.

The only reason I've put an "ish" in the subject line is that, for now at least, the energy market is working and the regulator seems to have a reasonable handle on things. It's likely that suppliers will continue to go bust but there's still enough energy to go around and consumers are unlikely to be cut off. That could of course change if we have a cold snap or unplanned outages (like the fire at the French interconnector that has taken the equivalent of one large power station off-line).

Had to look 2 pence = @1 Pound as  $1.38...  2 P / KwH seems really cheap.

I pay $0.22 USD/KwH.

and that will no doubt go up...again/

[sheddi]

2p/kWh to 21p.

(SNIP)

Had to look 2 pence = @1 Pound as  $1.38...  2 P / KwH seems really cheap.

I pay $0.22 USD/KwH.

and that will no doubt go up...again/

I'm pretty sure my original post says 12p to 21p, not 2p to 21p. And no I haven't just edited it
12p is $0.16, 22p is $0.30.

The energy crunch is continuing here, three more domestic suppliers went into administration last week. Two were pretty small but one had 200k customers. Fortunately the system anticipated this; if your supplier goes bust you don't get disconnected, but instead get transferred to a new supplier (usually a more expensive one).

Also, fuel supplies are still scarce. Apparently the shortages are easing in some areas but it's not obvious here where I am.

[lurkedthere]

I'm struggling with this one :-

BBC News - Petrol supply: Reserve fuel tankers on the road to help boost deliveries
https://www.bbc.co.uk/news/uk-58729653

I thought it was a shortage of drivers, not tankers.

[sheddi]

I'm struggling with this one :-

BBC News - Petrol supply: Reserve fuel tankers on the road to help boost deliveries
https://www.bbc.co.uk/news/uk-58729653

I thought it was a shortage of drivers, not tankers.

I agree, all the official messaging around this is a bit weird.

There was a chap from one of the fuel retail trade bodies on the radio a day or two ago. He explained that gas stations generally have 2-3 days reserve on their underground tanks, in case of eg. bad weather that delays supplies. With the number of stations that have run dry in recent days, it will take quite a while to get enough fuel delivered to them and bring them back to that position.

Gas stations vary in size but one that weas on the news last weekend (I may have mentioned it before) told reported they normally sell 8000 litres (about 2000 gallons) a day but had sold 28000 litres (about 7000 gallons) in a day at the start of the crisis. That's pretty close to a tanker full (35-40000 litres). Maybe they need more tankers so they can send one to each station rather than one tanker servicing three or four of them?

[lurkedthere]

Maybe they need more tankers so they can send one to each station rather than one tanker servicing three or four of them?

Each tanker still needs a driver though and that's the limiting factor. Perhaps Europe can help?

Oooops!

BBC News - Overseas fuel driver applications fall short
https://www.bbc.co.uk/news/business-58800848

27 or 127 applications depending upon if you are The Times or Boris.

They might have to offer big bonuses to encourage uptake. Existing drivers would likely be excluded which would leave them unhappy and headed for the door.

You can see it coming can't you ...

[Raptor]

I'm struggling with this one :-

BBC News - Petrol supply: Reserve fuel tankers on the road to help boost deliveries
https://www.bbc.co.uk/news/uk-58729653

I thought it was a shortage of drivers, not tankers.

Not an expert and no first hand knowledge of any kind...just spit balling here.

Driving a fuel tanker is one thing but loading and unloading is another. A driver needs training on the specific equipment at least in the US. It is not hard but there are specific procedures and protocols that must be followed to safely unload gasoline. These can differ from fuel tanker to fuel tanker. 

Also there is the issue of liability regarding driving and fuel spillage as well as defective & certified equipment. The DoD would not want liability for private equipment that may or may not be defective and the private equipment owners would not liability for DoD drivers that may or many not not meet their insurer's minimum requirements

I suspect part of the answer is that it is simpler and more expedient for the DoD drivers to use DoD equipment to avoid delays for training and liability purposes. If everybody is using their own equipment, the above issues are minimized.   

Gas stations vary in size but one that weas on the news last weekend (I may have mentioned it before) told reported they normally sell 8000 litres (about 2000 gallons) a day but had sold 28000 litres (about 7000 gallons) in a day at the start of the crisis. That's pretty close to a tanker full (35-40000 litres). Maybe they need more tankers so they can send one to each station rather than one tanker servicing three or four of them?

That is the psychology of panic buying. What is likely is that people who used to drive around until they get to a 1/4 of tank are now buying fuel when the fuel gauge hits 1/2 a tank.

[MPMalloy]

I'm struggling with this one :-

BBC News - Petrol supply: Reserve fuel tankers on the road to help boost deliveries
https://www.bbc.co.uk/news/uk-58729653

I thought it was a shortage of drivers, not tankers.

Not an expert and no first hand knowledge of any kind...just spit balling here.

Driving a fuel tanker is one thing but loading and unloading is another. A driver needs training on the specific equipment at least in the US. It is not hard but there are specific procedures and protocols that must be followed to safely unload gasoline. These can differ from fuel tanker to fuel tanker. 

Also there is the issue of liability regarding driving and fuel spillage as well as defective & certified equipment. The DoD MoD would not want liability for private equipment that may or may not be defective and the private equipment owners would not liability for D MoD drivers that may or many not not meet their insurer's minimum requirements

I suspect part of the answer is that it is simpler and more expedient for the D MoD drivers to use D MoD equipment to avoid delays for training and liability purposes. If everybody is using their own equipment the above issues are minimized.   

Gas stations vary in size but one that was on the news last weekend (I may have mentioned it before) told reported they normally sell 8000 litres (about 2000 gallons) a day but had sold 28000 litres (about 7000 gallons) in a day at the start of the crisis. That's pretty close to a tanker full (35-40000 litres). Maybe they need more tankers so they can send one to each station rather than one tanker servicing three or four of them?

That is the psychology of panic buying. What is likely is that people who used to drive around until they get to a 1/4 of tank are now buying fuel when the fuel gauge hits 1/2 a tank.

ftfy

[sheddi]

Almost a year on and the energy crisis is still with us, and for all the same reasons.

Wholesale NG futures for this coming winter are over 20 pence (20p, £0.20) per kWh (US$0.24 per kWh).

See here (prices in pence per therm, a therm being about 29kWh):
https://www.theice.com/products/910/UK-Natural-Gas-Futures/data

For comparison, the historic longterm trend is around 60p per therm, 2p per kWh.

This is having a knock-on effect on electricity prices, since something like 40% of the UK's electricity comes from CCGTs burning NG.

Retail prices (those paid by householders, including taxes and charges and so on) have historically been around 3p per kWh for NG and 15p per kWh for electricity.

This summer, for people who have had fixed-price deals end, prices have been more like 7.5p per kWh for NG and 28p per kWh for electricity (very roughly double expected prices). Prices are expected to double again from October to 15p/kWh for NG and 55p/kWh for electricity.

We're all hoping for a mild winter.

From a personal perspective, the solar PV on my roof (and the homebrew battery backing it up) has been a boon during the summer months but will not make much of a dent in my electricity bills from November to February. And it won't touch my NG use. I've also spent a lot of time this year on another forum helping people understand and manage their energy bills, which has kept me away from here (sorry, there are only so many hours in the day).

Diesel and gasoline prices have also surged during this period, from about £1.30 a litre (US$4.90/gallon) a year ago to £2 a litre ($7.60/gal) through April to July; they've started to fall back slightly now, but only by £0.20 a litre so we're still around $7/gal. I had to change my car and am now running a turbodiesel that gets almost 70% better gas mileage than my old Subaru did, but due to the increase in prices the cost per mile is pretty much the same