gas shortage could damage economy


A GAS shortage could harm the economy and send inflation soaring, the governor of the Bank of England warned MPs yesterday.

Mervyn King told the Commons Treasury committee that economic growth would be stunted if a gas shortage forced manufacturers to cut production.

"There might be some risk to economic activity over the next year if there were to be reductions in supply because of the effect of higher energy prices," he said.

The gas industry has warned that supplies were on a knife edge this winter and could tip into crisis if there is a major breakdown in the ageing North Sea fields and pipelines.

UK gas is now the costliest in the world while dwindling reserves make for the tightest supply in history.

Jonathan Stern, of the Oxford Institute of Energy Studies, said North Sea oil equipment was now nearing the end of its life.

The five-fold escalation in some gas prices has led to warnings of a three-day working week, and triggered some manufacturers to cut back on output

What's the phone number for GazBleu? 8O
On the 27th October the DTI published the following information, thanks to Nick Rouse for bringing it to my attention:

For the three months June 2005 to August 2005 compared to the same period a year earlier:
- production of petroleum fell by 16.2%;
- production of natural gas fell by 17.0%;
- production of coal and other solid fuels fell by 24.9%;
- electricity produced from nuclear sources rose by 11.8%;
- electricity produced from wind and natural flow hydro fell by 4.4%.
Energy Trends Table 1.1

"Bad News For UK Energy" 4 December 2005
We get this in germany before the prices go up......before winter .............before holdays,and yet the Govt doesn´t even consider dropping the high taxes it rakes in.The same goes for GB,then they raise the prices untill we start screaming,that sets the pain threshhold,then the prices level out again,it´s just a warning order,get used to it!

The money the oil company rakes in,on just a few weeks of high prices,billions.The next storm,tzunami,typhoon,allways comes along,any f***ing excuse to put the prices up.

Just the dealing on the stock exchange,accounts for 20%,of the cost of gas and oil,think about it, so much money just to set the price,ever feel that somebody´s taking the p*ss?

Midnight..................I feel another price rise coming............................!
It's the fault of the Conservatives (Maggeis lot) if they had sorted things out when in power then this situation would not be happening now. Dear leader has only just got into power and has not had a chance to sort out all the cr ap left for him. His Chancellor has been far to busy to notice this as he has had his hands full getting rid of all that usless gold that had been left for him.
Good news

Work is beginning on the construction of an ambitious underwater gas pipeline project linking Russia and Germany.
The 1,200km (744 miles) pipeline is set to deliver Russian gas to Germany, and eventually to other west European nations, via the Baltic Sea by 2010.
Russia has the biggest gas reserves in the World.
"Russia has the biggest gas reserves in the World. "

Good for Rooshia, now UK needs many new Nucular generators so we don' t use too much gas and become a too dependant nation.
jonwilly said:
"Russia has the biggest gas reserves in the World. "

Good for Rooshia, now UK needs many new Nucular generators so we don' t use too much gas and become a too dependant nation.
All it takes is money.
We've got plenty of the stuff here,(Southern North Sea).But nobody wants to pay the price we sell at. Go on, buy some today only £1.56 a therm, you know it makes sense.

I need a pay rise next year,plus bonuses ofcourse.
From Bloomberg via The Moscow Times:

"The Central Bank has raised the share of the euro in the basket against which it targets the ruble and lowered the weight of the dollar.

"The Central Bank increased the share of the euro to 0.4 euro from 0.35 euro and cut the share of the dollar to $0.60 from $0.65, it said in a statement Friday."

5 December 2005

Russia used to peg the ruble exclusively to the dollar. It it were to persist in stepwise increasing the weight accorded the euro in its currency "market basket" target, it would eventually reach a point at which the euro is weighted 1.0 and the US dollar is weighted 0.0.

At that point, for all practical purposes, the Russian currency would be the euro except in the technical sense that it will have a picture of a dead Russian statesman on it.

Russia is preparing to supply NG to an NG-starved Eurozone.

Russia has previously discussed the possibility of quoting Russian oil on world markets in euros. (It has not actually done so.)

Russia could, if it chose to do so, give the euro an enormous boost in international acceptability at a time when some are wondering just what future the US dollar might have as the world international reserve currency.

I could imagine astute Russian diplomacy persuading the Euro-crats that Russian participation could make it possible to deal a strong rebuke to USA arrogance and high-handedness.

I could envision the Russian government possibly taking the view that if Eurozone is to enjoy the benefits of a fairly high degree of economic integration with Russia, then Russia must be granted a larger voice in Eurozone economic, political, cultural, and military affairs.
"Russia must be granted a larger voice in Eurozone economic, political, cultural, and military affairs"

True, all politics at the highest level.
Europe needs cheap fuel and Rooshia needs the money to finance it's growth.
Be nice to think we can all be friend in the future, not simple but thens thats life.
A new pipeline from Norway has just been laid, and that is where Britain will buy 65% of its gas in the comming years. Thier higher paid then us, so prices will be reflected in what you pay.
we can still sort out a pipeline deal with Russia, seems that Russia is finally coming in from the cold so to speak and become a significant economic force, America is right to be worried if gas and Oil is quoted in Euros, the Economic impact will be significant as traders will drop the Dollar for Euros, forcing USA to buy Euros to buy Gas and Oil.
we may even be forced to join the Euro if the economic benefit outweighs nationlistic concerns for "Queens head on a banknote", only then if it is of benefit to UK i would agree to it.
I've been led to understand it's all a hype to divert our attention away from other things and to make nuclear seem more acceptable.

I've also been led to believe that the following is the true situation:

There is at least 30 years supply left under the north sea. The major crisis is that new fields which should have been online are slightly late.

Apart from the pipeline to Norway there is the existing pipeline to Ireland which feeds off the Kinsale fields which have a mass of surplus capacity.
Russia is nine days away from potentially carrying out a threat to reduce gas supplies flowing through a pipeline across Ukraine to western Europe, unless Kiev pays higher prices for gas it takes from the pipe. The result could be winter energy shortages in some European countries.


...Russia is ever more confidently wielding its mammoth reserves of oil and natural gas as a political tool. High prices, tight supplies, and the west’s desire to reduce reliance on Middle East suppliers are increasing its leverage.

“It is not that energy is the new atomic weapon,” says Cliff Kupchan, an analyst with the Eurasia Group consultancy and former state department official in the Clinton administration, “But Russia knows petro-power, aggressively and cleverly applied, can yield diplomatic influence.”


...Gazprom, the state-controlled gas giant, is demanding that former Soviet states, which since the USSR collapsed in 1991 have enjoyed subsidised prices for Russian gas, finally move to market rates.

But it is doing so in a highly differentiated way. Ukraine, having shifted out of Moscow’s orbit since last year’s Orange Revolution, has been slapped with the biggest demand for a price increase. Prices charged to Georgia and Moldova, which have also turned their gaze westwards, have nearly doubled. Yet Belarus, loyal to Moscow, is still getting gas at the old price.


Also this month, Russia started construction, with some fanfare, of the $5bn North European Gas Pipeline, an export route under the Baltic sea to Germany that will bypass the Baltic states, Ukraine and Poland. It attracted even more attention by naming Gerhard Schröder, the former German chancellor, project chairman.

Within days, word leaked that Russia’s president Vladimir Putin had asked Donald Evans, the former US commerce secretary and close friend of President George W. Bush, to chair Rosneft, the Russian state-owned oil company preparing for an initial public offering. Mr Evans this week politely declined, citing other commitments.

Moscow seeks to use petro-power as political tool
By Neil Buckley in Moscow
Published: December 22 2005 18:17 | Last updated: December 22 2005 18:17
Not_Whistlin_Dixie said:
Russia is nine days away from potentially carrying out a threat to reduce gas supplies flowing through a pipeline across Ukraine to western Europe, unless Kiev pays higher prices for gas it takes from the pipe. The result could be winter energy shortages in some European countries.
Proposed price for Ukraine is equal to the price for Germany. New Ukrainian leadership plans to spend big money for modernisatin of Ukrainian army (so it could be more close to NATO standards). Why should Russia pay for it?

There is an agreement with Belarus to creat a common state with Russia. So inrernal Russian prices are using toward Belarus.

Latvia is an important country for transit of Russian oil (1/3 of its budget is formed from thie source). Prices for the transit are resonable. But Ukraine threaten to establish German prices for transit of gas. So Russian reaction is very natural.

But the way Ukraine threaten to "borrow" gas that has European destination. In this case, of course there is a denger of gas shortage. But I'm sure that EU would tell Yushchenko what a democracy really means.

Ukraine has ouw gas, enough for home usage. But with Europen gas prices Ukrainian Steel industry (40% of export) and Chemical one (20% of export) would be in stagnation. Their pruduction would be too expensive.
BRITAIN'S industrial giants have been warned by ministers to prepare for a total production shutdown in a bid to protect power supplies to domestic users.

Amid escalating concerns about dwindling supplies and soaring prices, the Department of Trade and Industry (DTI) is preparing to trigger contingency plans designed to limit consumption of gas and electricity

Scotland on Sunday can reveal that the government has revised its official estimate of how cold the winter is likely to be since an assessment was completed in October, and the demand on UK fuel supplies is now expected to be much greater.

Special measures for the looming crisis could see big industrial users, such as car manufacturers and steel plants, required to "restrain demand", while electricity generators will be told to switch to alternative fuels, including coal. If the actions fail to curb consumption, officials reserve the right to intervene to impose temporary switch-offs.

The interventions in industrial use are being prepared as part of a desperate bid to protect supplies to domestic customers, who already face rising fuel bills after the freezing temperatures across much of the country.

"Top firms warned of power rationing" 1 January 2006



I read the other day that the UK has hundreds of billions of tonnes of coal reserves. I'd have thought that with modern technology we could start to convert some of that into methane and other hydrocarbons and therfore become a little less reliant on everyone else. I guess that this becomes more attractive as prices start to rise

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