This is the second in a series of blogs using data from Argus Data and Downloads, which are available to Argus Direct subscribers here.
Yesterday’s blog analysed the recent increase in Russian producer Gazprom’s exports to Europe, despite weaker prices. But it is not only Gazprom that has an unorthodox supply curve — you and I do too.
There are some similarities to the backward bending labour supply curve. People at first try to work more as wages go up, but once income reaches a certain level they will start cutting hours to free up leisure time.
This is the first of a series of blogs using data from Argus Data and Downloads, which are available to Argus Direct subscribers here.
Two stories at the start of July pointed to a large increase in Europe’s gas supply this summer and talk of a “price war”.
European LNG sendout in the second quarter rose to the highest in several years, while Russian exporter Gazprom’s sales in April-June were a record for the second quarter.
The UK’s two largest political parties have proposed taking back control of energy prices at a time when they have the least power over them.
The opposition Labour party plans to create publicly-owned energy companies and an “emergency price cap” on household energy bills, according to a leaked draft version of its manifesto.
Labour declined to comment on the leaked document with a “clause 5” meeting to scrutinise the draft manifesto today.
A UK energy price cap based on wholesale markets could still result in substantial changes to tariffs, especially if the 2016-17 winter’s price spike is repeated.
The UK’s Conservative Party, which polls put on course to win the upcoming general election, has proposed an energy price cap to be set by the regulator. The cap is likely to be based on prices at the UK’s NBP gas hub, a trading point for wholesale gas.
Developments at France’s smaller TRS gas hub this winter have provided some good parallels with the UK’s NBP, one of Europe’s most liquid markets.
The TRS was — in my view — Europe’s most exciting market, with prices responding well to the fundamental drivers of supply and demand. It also delivered some interesting examples of how European hub pricing might operate as global LNG supply increases, along with the potential for more volatility in prompt prices.