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Excellent additions - to which two of my additions :-)

  1. Another point on why prices first went down, to recap: the pre-deregulation regional monopolists (grid+production) have slowly raised prices prior to deregulation (at least for six months, but maybe three years), and then used this extra profit in price wars that eliminated almost all new upstarts. The newcomers were mostly dead by 2001, just when prices started to move up...

  2. I still think the connection to gas prices should be less strong in Germany, because (a) gas there doesn't come from the depleting North Sea, (b) it's still just under 10% of total production. (Gas prices rise there too, but that may be hitch-hiking; one producer was sued successfully by a consumer group to release its price calculations, which they refused even after the court order.) I don't know where to look for German gas price (or any other) data to check correlation, tough. Maybe someone can help out?


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Wed Oct 12th, 2005 at 05:19:28 PM EST
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  1. I don't know the details in Germany, but it sounds logical enough
  2. Gas prices in all of Europe except the UK are set as moving averages of oil prices (they follow it with a 6 month lag, basically, and much less short term variation). Natural gas prices set the marginal price in the general European market, it doesn't matter if Germany has less gas-powered capacity, the price is still set by gas (unless you have unusual stuff like very high or very low hydro production in Scandinavia, or less nuclear available than usual in France, like during the heatwave two years ago)


In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Wed Oct 12th, 2005 at 05:48:56 PM EST
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Jérôme, I have only recently (in the last couple of days, really) noticed you mentioning the fact that energy prices are set by gas prices because the latter are marginal. While this is elementary once one is introduced to the concept, most people have never heard of it. Given that this was one of the few points that Adam Smith made repeatedly in his Wealth of Nations, public misunderstanding of how marginal sources set the price of commodities must rank up there with people not knowing about Newton's laws of motion (a topic more dear to me personally). I would write a diary about it were it not that you are probably better equipped that I am to write it (including access to hard data), unless you think there is value in having a non-economist write about it and reserving your sharp wit for smoothing out my corners.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Carrie (migeru at eurotrib dot com) on Thu Oct 13th, 2005 at 11:07:23 AM EST
[ Parent ]
with my new found fame on dkos, I am taking on so many projects that I fear I will default on all... (not to mention that I do have to work once in a while)

This is indeed an important topic, on which I have already done a number of comments (which I have stupidly not saved in an easily retrievable place), but which certainly deserves a full diary. If you have the time and courage to go for it, I'd be happy to give you my input if you want before posting it. My email is below.

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

by Jerome a Paris (etg@eurotrib.com) on Thu Oct 13th, 2005 at 05:47:17 PM EST
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