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Markets are just magic

by Jerome a Paris Thu Aug 30th, 2007 at 08:33:06 AM EST

I went to read the article quoted below because of its funny lead about Sarkozy ("There is one big problem with the proposed French mega-merger of Suez, the power, gas and water utility, and Gaz de France (GdF) (...) - that it was not Nicolas Sarkozy's idea") but had to react to that bit of propaganda:


Gas is becoming cheaper and could become even more so in Britain over the next few years, thanks to new infrastructure. Huge volumes of Norwegian gas are being pumped into the UK and a convoy of ships will be delivering frozen gas to terminals on the Thames and in West Wales from 2009. Britain is creating an expanding gas balloon with an exit valve at the Interconnector pipeline to Zeebrugge.

Cheaper?

Oh yeah, and let's not mention the fact that Norwegian and LNG imports are meant to replace collapsing domestic production, and that this winter was incredibly mild and thus helped cut demand for heating...

Promoted by whataboutbob



It's a huge opportunity for aggressive energy companies to compete, buying cheap gas in Britain for export to the Continent. It will not only cause a commercial headache for incumbents, such as GdF, which are tied to expensive, long-term contracts to buy Russian gas, but also a political problem, as the French Government will come under intense pressure to deliver cheaper energy to consumers.

Cheaper is surely a challenge, but cheaper than ther UK?


Unprivatised, monopolistic, sluggish GdF is a political accident waiting to happen. Without a merger, it can only become a whipping boy for angry regulators and consumers.

It is privatised, it is not monopolistic (just dominant because, precisely, it is competitive thanks to its long term supply contracts - the same long term contracts that made the Norwegian pipeline possible - and its focus on infrastructure - a competence it is now bringing to the UK market, by the way).

This report by Poyry (pdf), a well known market consultant, suggests that the future is quite hard to predict - they have several radically different scenarios for the future

Excess capacity (and note that import capacity is not quite the same thing as supply as the winter last year showed with little supply coming via the interconnector from the continent despite the record prices in the UK, and as the future is likely to show when the US and Spain will offer to pay more for LNG to ensure supply).

So, with a nice underlying hypothesis of steady oil prices at 50$/bl, you get massively variable price scenarios for the next 5 years.

But the UK market is just so superior to what's done on the continent.

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I think anybody who believes that infrastructure such as energy supply should be left to the vagiaries of the market is living in a fools paradise.

But sadly, until the US/UK implode under the weight of their own contradictions, there are too many in positions of influence who stand to gain from this madness.


keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Wed Aug 29th, 2007 at 08:11:55 AM EST
Little old cynical me observes, about the 'Mixed Up Market' graph:

Survey based on prices as of April 1, 2005 ...

and wonders why they went back 2 years and 4 months for their data.  

Skepticism is the first step on the road to truth. -- Denis Diderot

by ATinNM on Wed Aug 29th, 2007 at 09:26:51 AM EST
that graph comes from an Economist article published in February 2006. I just dug it out of my files because it's an impeccable source to contradict their ideological discourse.

(I originally used it in a diary that balsted the Economist for claiming - in the very article where that graph was published - that "of course the British liberalised system was superior because it delivered cheaper prices"...)

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Aug 29th, 2007 at 09:40:57 AM EST
[ Parent ]
It will not only cause a commercial headache for incumbents, such as GdF, which are tied to expensive, long-term contracts to buy Russian gas, but also a political problem, as the French Government will come under intense pressure to deliver cheaper energy to consumers.

Hahahahahahaha!

Are they out of their fucking minds? :)

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Wed Aug 29th, 2007 at 03:20:33 PM EST
It's Pöyry, not Poyry. Another formerly Finnish industrial family. I should do a diary one day about them, since I have seen some of these dynasties from the inside.

Pöyry PLC is now in the hands of institutional investors with net sales of € 620 million, but other parts of the empire are still in the family.

For more dynastical fun you have to look up Ahlström (now officially Ahlstrom), Ehrnrooth, Paulig, Fazer, Hartwall, Strömberg etc. Not too many Finnish names in there ;-).

But look at Finnish joint stock companies of 100 employees or less and you'll find 1000's of Finnish-named family companies. It is not especially tax-beneficial, it simply reflects recent Finnish entrepreneurial  history. 'You run a farm, you can run a company'

You can't be me, I'm taken

by Sven Triloqvist on Wed Aug 29th, 2007 at 05:08:52 PM EST
For more dynastical fun you have to look up Ahlström (now officially Ahlstrom), Ehrnrooth, Paulig, Fazer, Hartwall, Strömberg etc. Not too many Finnish names in there ;-).

Do you know the old leftist song "Laulu 20 perheestä" ("Song about the 20 families")? Its chorus lists the names of those families who supposedly owned Finland (in 1969, when the song was written).

You have a normal feeling for a moment, then it passes. --More--
by tzt (tzt) on Thu Aug 30th, 2007 at 11:31:29 AM EST
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