Green Building Forum - energy prices

energy prices

bot de paille — Tue, 15 Nov 2022 12:37:33 +0000

Just wanted to add some data to the discussion about the recent energy and general price inflation.

This is not something I see discussed or generally known about by many people ,which its a bit shocking considering but I think is important if the current situation is going to be properly understood and put in context.

The amount of money that has printed by most countries in the last 3 years is absolutly phenomoinal. Priniting presses went into overdrive to keep economies afloat during the C19 lock downs. The massive price inflation we are now experiencing is a direct result. Prices have not increase, money has lost value directly proportional to the amount that is diluted by the digital printing presses.

US was by far the biggest printer, followed by China, the EU , UK.
We are now suffering the results.

Below graphs are for M2 money supply.

The UK....

energy prices

philedge — Tue, 15 Nov 2022 12:37:47 +0000

@WIA. You might need to look a bit earlier than 1 October as our first supplier to go bump packed up in September and prices had been high for a while then

energy prices

bot de paille — Tue, 15 Nov 2022 12:38:48 +0000

EU money supply:

energy prices

bot de paille — Tue, 15 Nov 2022 12:40:19 +0000

and the winner, US money printing. And because world energy prices are denominated in Dollars this has had by far the biggest impact.

energy prices

bot de paille — Tue, 15 Nov 2022 12:44:17 +0000

And to really put things in perspective, this graph of US money printing going back 80 years. Red line is inflation, gray line is money supply/printing, which skyrocketed in 2020:

energy prices

bot de paille — Tue, 15 Nov 2022 13:23:29 +0000

The new prices are a reflection of the dilution/ reduction of the value of money. Savings, pensions, salaries. Its as if governments took everyones money and ripped it into 2 pieces to make more money. 2 pounds/euros/dollars are now worth what 1 was worth pre 2020.

The new prices are baked in and not going down again.

energy prices

djh — Tue, 15 Nov 2022 13:31:18 +0000

Posted By: WillInAberdeenSo is that the end of the energy price crisis, or just a lull?

Not so much of a lull, more a gust, methinks. The graph you show gives day ahead prices. Spot prices have a similar structure but don't show the exceptionally low price at the end. And if you look at a five year graph instead of a one year graph, you can see that the whole of the latest year is way above historical rates, so things are definitely not normal. Prices recently have been influenced by the extremely windy weather we've been experiencing, and will no doubt go back up somewhat when the wind eases.

energy prices

WillInAberdeen — Tue, 15 Nov 2022 14:29:28 +0000

That graph seems to be missing the most recent period? The spot price has been ~Â£50-150/MWh for the last four weeks, not far above the pre-covid level.

https://www.epexspot.com/en/market-data

It has been windy some of those days, but not all?

energy prices

bot de paille — Tue, 15 Nov 2022 16:08:38 +0000

Energy prices started spiking massivley back in Sep 2021, long before the war in Ukraine.

energy prices

Newbuild — Tue, 15 Nov 2022 16:25:15 +0000

All of the EU has a massive problem. Need to generate more than you use...

energy prices

djh — Tue, 15 Nov 2022 17:08:07 +0000

Posted By: WillInAberdeenThat graph seems to be missing the most recent period?

The latest reading on the graph I showed is 14 Nov, whilst that on the one you put up is 7 Nov so I think you're misunderstanding.

energy prices

WillInAberdeen — Tue, 15 Nov 2022 17:45:05 +0000

UK spot market price, as traded on the Epex exchange

Â£127.15/MWh

Last Update: 15 November 2022 (18:33:30 CET/CEST)

https://www.epexspot.com/en/market-data

Similar prices on Elexon, Energy Insight, Energy Stats

No idea what that chart is showing that you posted, but its final value is 2x higher than today's market price. Is it some kind of backward-looking index? Or prices of contracts for future deliveries?

energy prices

bot de paille — Tue, 15 Nov 2022 18:20:06 +0000

Need to stop printing vast amounts of money, causing price inflation

Its interesting that EU energy consumption has has not grown since 1990.

energy prices

bot de paille — Tue, 22 Nov 2022 00:30:09 +0000

Energy didn't become more expensive, money was massively devalued by printing...

energy prices

WillInAberdeen — Tue, 22 Nov 2022 10:04:40 +0000

So it seems from the Autumn Statement that renewable and nuclear generators are still allowed to charge over-inflated electricity prices, but now the Treasury will take a slice of their windfall profits in tax. Ironically, the Treasury will then pay out that money (and more) to subsidise the electricity prices for consumers, so further pumping up the windfall profits, in a circular payment scheme. Some funny tricks happening here, can't work out what/why!

It would be better if the renewable and nuclear prices were just reduced, to reflect their underlying costs which are not going up. IE renewables prices should be decoupled from the market price, which is mostly driven by the fluctuating cost of gas-fired generation, as we discussed a few pages ago.

On that, the continuing fall in wholesale electricity price in November seems to be driven by the ongoing fall in wholesale gas prices, down now from the panic pricing situation over the summer.

The forward price that companies pay for gas for next January delivery, is very much less now than if they had pre-purchased their gas in August for next January delivery (= hedged). Unfortunately, that's exactly what OFGEM required all the energy retailers to do (except it seems for Bulb) and so the retail price next January will remain very high, due to those unfortunate hedge pre-purchases. Someone is making a lot of money out of that off the backs of consumers, again it's not clear who!

energy prices

fostertom — Tue, 22 Nov 2022 10:40:32 +0000

Gordon Bennet perhaps

energy prices

bot de paille — Tue, 22 Nov 2022 12:02:32 +0000

The US printed 13 Trillion during the covid lockdowns.Increased money supply by 35 percent!!!

https://www.nasdaq.com/articles/money-printing-and-inflation%3A-covid-cryptocurrencies-and-more
Nov 16, 2021. Before the energy/gas "crisis"

" All-in money printing totaled $13 trillion: $5.2 for COVID + $4.5 for quantitative easing + $3 for infrastructure. Mountains of money cause inflation

All-in spending was approaching $13 trillion as of mid-2021. Thatâ€™s more than the US spent in itâ€™s 13 most expensive wars combined. We use wars because theyâ€™re the most expensive things we can think of. Money printing for Quantitative Easing (QE) appears to have worked, so the plan is to load on a bunch more paper money. Is there no limit?

The $5 trillion in COVID relief increases the money supply by 27% and does so very quickly â€“ the floodgates are open."

Monetizing $5.2 trillion in COVID relief increases our money supply by 27% and comes on top of $4.5 trillion in QE. Add another $2 trillion in planned infrastructure spending and we have $13 trillion in new money, which is a 35% increase in paper money in circulation and 60% of GDP. Itâ€™s a lot of paper.Â The total cost of our 13 most expensive wars is $10 trillion.

$5.2 trillion in COVID relief will tip us over the monetary edge. Weâ€™ve been â€poking the bearâ€ testing to see how much money can be printed without repercussions. The bear is awake now and about to attack. Baby boomers need to be especially concerned because their lives might never be the same if they donâ€™t protect now. Younger investors have a shot at recovery.Â
"

energy prices

bot de paille — Tue, 22 Nov 2022 12:56:46 +0000

Why is this not being publicly discussed ?

Possibly because to do so would require governments taking some responsibility and:

" Baby boomers need to be especially concerned because their lives might never be the same if they donâ€™t protect now. Younger investors have a shot at recovery.

No one wants to take responsibility for the long term devastating effects that this is going to have for hundreds of millions of people.

energy prices

fostertom — Tue, 22 Nov 2022 14:18:13 +0000

It's 'obvious' that increasing money supply (aka printing money) will 'dilute' the existing money that's out there, thus diminishing its value (what Â£1 will buy) in proportion.

Isn't that one of those unexamined 'common sense' beliefs that are falacious (like Mrs T's likening of the sovereign national economy to a housewife's purse), or one of those philosophical thought-experiments (like Adam Smith's market/competition/'hidden hand' hypothesis) which are incapable of respectable scientific experimental verification? Both of which persist for centuries because they suit the rich and powerful, against piles of less-than-scientific 'anecdotal' experience.

It all depends whose pocket the printed dosh ends up in (or passes through). Certainly if it becomes increased spending money in public's or firms' pockets, while supply of desirable things to spend it on remains static, then you have a bidding war, where the attainable (market) price of everything goes up and/or imports increase i.e. money value is diluted = the inflation that is supposed to follow inevitably (and frequently has done) from printing money.

Is that's what's happened with all the QE-type money printing lately? I don't think so - public and firms haven't suddenly felt flush with extra money, so what can we spend it on? The QE money went somewhere else, and AFAIK it very rapidly ended up as funds available to the rich, and corporations, to bid up the aggregate price of stocks, shares and securities, competing for those tokens of power and control.

The price of stocks are nowadays mainly fluctuating paper value in a speculation of 'making' money out of buying and selling money, having almost nothing to do with the 'real' economy of health (or not) of firms, people working, producing useful goods and services, getting paid, and buying those goods and services. Because nowadays 'making' money out of buying and selling money gives much better returns than investing same money as capital in the 'real' economy, and money tied up in such speculation is several times greater, and growing fast, than the 'real' value of world economies.

All that QE-style printing of money, by supposedly 'diluting' money, is not the cause of present inflation, which stayed away for 13yrs after the great QE-splurge post-2008.

Instead, money could be 'printed' but carefully targeted, by legislation and/or central-bank-style manipulation, to go where it's beneficial, and above all not into inflating stock market prices. Inflation may be because of excess money in public's and firms' pockets relative to static supply - or the other end of that eqation is unchanged spending money relative to inadequate supply e.g. Mrs T's dismantling of UK's dispersed manufacturing in favour of City of London 'financial services' (see above).

In that case, directing 'printed' money specifically to increase production/productivity/apprenticeships etc down the line), in corporations, firms, local businesses/startups, within a raft of measures to keep the money circulating locally, regionaly or nationaly. Don't say such 'direction' would be impossible - no one's tried such heresy yet. Would that be inherently inflationary? Even if it was, it would be as accompaniment to 'real' growth i.e. excluding stock market and speculative money-churn.

energy prices

bot de paille — Tue, 22 Nov 2022 15:18:05 +0000

The QE was used to prop up the economy, support businesses with hand outs and tax breaks for 2 years whilst the world economy was effectively put on pause. Ask yourself why no major airline went bust, for example? Because they were given money and exempt from taxes. That QE was needed to plug the hole of missing tax income and productivity.

Here in France as 1 example, every single restaurant was given 15k a year, employees were put on full pay and told to stay at home, , and paid to go on training courses to give them something to do. etc etc. Al l paid for by the gov printing money.)

The massive QE after 2008 plugged the huge debt hole that had built up over several years (subprime mortgages, junk bonds) and was spent on maintaining property prices and the bond market. Otherwise, there would have been a huge global property crash. Which could not be allowed to happen as that is where most people wealth is now stored. So that QE is seen and swallowed up in continuing to prop up high property prices. The inflation wasnâ€™t in goods, the inflation was seen in house prices.

A lot of that QE was also exported to China as consumers products manufactured in China. The Chinese invested that printed wealth into their real estate bubble that is currently looking like its about to implode.

The absolutely gargantuan QE that has taken place 2020 -2022 (far far more than post 2008) has had a huge impact because that money pump is chasing a very limited supply chain, again due to the C19 shutdowns. That printed cash (+35% US dollars in 2 years!) is chasing fewer available goods as a result, leading to massive inflation.

The increase in interest rates means that banks are not approving mortgages, which means that extra money cannot go in real estate prices as it did post 2008.

The current inflation is very much due to money printing/ devaluing of money vs material goods and energy.

Also, the current gov of the bank of England has recently admitted that QE during the lock downs is largely responsible for the current inflation. So its not just me.

energy prices

fostertom — Tue, 22 Nov 2022 16:16:18 +0000

bdp, you say where the 2008 QE went - direct to businesses (fair enough), at least into restaurants in France, and imports, and somehow to maintain property prices (was that intentional?), tho AFAIK UK's QE went initially to keeping banks liquid after they'd lost piles of customers' deposits after using same as gambling chips - i.e. as I say sucked (before it even landed) out of the 'real' economy into 'making' yet more money out of buying and selling money.

Where do you say the 2020-22 printed money was routed? Could it have been carefully targeted and kept in useful circulation using legislation and central-bank manipulations, to ramp up production, as that was what was depressed, to soak the money up, thus expanding wages paid hence tax revenue (as well as seriously capping energy co prices/profits esp non-fossil energy producers)?

energy prices

bot de paille — Tue, 22 Nov 2022 17:01:31 +0000

This is where the QE/printed money went in 2020-2022, basically to keep the world economy running whilst ion "pause":

"The QE was used to prop up the economy, support businesses with hand outs and tax breaks for 2 years whilst the world economy was effectively put on pause. Ask yourself why no major airline went bust, for example? Because they were given money and exempt from taxes. That QE was needed to plug the hole of missing tax income and productivity.

Here in France as 1 example, every single restaurant was given 15k a year, employees were put on full pay and told to stay at home, , and paid to go on training courses to give them something to do. etc etc. Al l paid for by the gov printing money.)"

I gave restaurants as just an example. Businesses across the economy were kept afloat during the 2 year lock down.

You are still fixed on the idea that energy prices have risen and therefore need capping. The data shows
that money has lost value, making it look like energy, food, products have risen in price. The gov of the BoE has recently admitted it.

The pound/Euro/Dollar in everyone's pocket, pension, bank account, property has become 35 percent less valuable than pre 2020, due to massive printing, the likes of which have not been seen in 80 years. No more complicated tan that.

energy prices

bot de paille — Tue, 22 Nov 2022 17:16:23 +0000

Even during and after the 2008 crisis, monetary printing/inflation was nowhere near the scale of the lockdown period, which historically speaking was like nothing seen before for the amount printed and the short timescale (except perhaps in Zimbabwe in the 2000s)

energy prices

fostertom — Tue, 22 Nov 2022 17:31:08 +0000

Thanks bdp. Looks like you and maybe others make the 2020-22 (but not the 2008-on) money printing the prime or inevitable cause of present inflation; whereas I'm saying you may be right, but not inevitably - present money printing is nothing like carefully, strongly targeted and leak-proof, in a calculated way, just it seems handed to the banks as a free present to do what they will with, in the belief it'll filter (trickle-down?) to wherever the (hidden hand of the?) market decides.

energy prices

bot de paille — Tue, 22 Nov 2022 18:29:19 +0000

Well , to be fair its accepted by the Bank of England that the current inflation has been caused by 2020-2022 QE. So its not a theory, or an idea being put forward. Its accepted fact now by the BoE and other economic institutions.

The disconnect is happening on a media/political/social level. The story has been sold that this is an energy "crisis". The energy crisis is the symptom, the cause is QE/inflation. Again, because that would mean taking responsibility.

The money that was printed 2020-2022 basically replaced 2 years of taxes and GDP, and paid to keep the economy running (civil servant wages, NHS, local services, schools , hospitals etc) As well as business hand outs to stop them going under.

energy prices

bot de paille — Tue, 22 Nov 2022 18:40:20 +0000

Posted By: fostertomThanks bdp. Looks like you and maybe others make the 2020-22 (but not the 2008-on) money printing the prime or inevitable cause of present inflation; whereas I'm saying you may be right, but not inevitably - present money printing is nothing like carefully, strongly targeted and leak-proof, in a calculated way, just it seems handed to the banks as a free present to do what they will with, in the belief it'll filter (trickle-down?) to wherever the (hidden hand of the?) market decides.

How do you explain the current inflation? Taking into account the fact that inflation in material, food and energy prices started rocketing in mid 2021 (but had started already before then)?

Another way of putting it:

How do you know what is causing the current inflation in energy prices?

Is it because you have studied the economics of the situation?

Or is it somethign that has been told to you by the BBC, Guardian, Telegraph etc? Part of the prevailing agreed upon cultural narrative?

energy prices

fostertom — Tue, 22 Nov 2022 19:55:25 +0000

As far as I remember, inflation was being predicted before Covid, and before renewed money printing. I don't know what was going to cause that, but didn't seem surprising after so long with unnaturally little inflation.

But worse with Covid causing shortages of many things > still single figure %age price rises, then Mr.P causing massive gas rises, and all-other fuel massive rises due to unfettered profiteering.

energy prices

bot de paille — Tue, 22 Nov 2022 21:26:08 +0000

Posted By: fostertomAs far as I remember, inflation was being predicted before Covid, and before renewed money printing. I don't know what was going to cause that, but didn't seem surprising after so long with unnaturally little inflation.

But worse with Covid causing shortages of many things > still single figure %age price rises, then Mr.P causing massive gas rises, and all-other fuel massive rises due to unfettered profiteering.

So, despite the fact that the BoE governor has said primary cause of current inflation is the unprecedented, never seen before QE lockdown; BBC, Guardian, Telegraph narrative wins the day?

Despite the fact that gas prices started rocketing in mid 2021, long before sanctions and mrP,; BBC, Guardian, Telegraph narrative wins?

Interesting.

energy prices

fostertom — Wed, 23 Nov 2022 07:37:32 +0000

OK I'm not an economics graduate so shouldn't question the experts. Especially if I read the Guardian, spitt.

energy prices

borpin — Fri, 25 Nov 2022 07:00:15 +0000

Skipping over all the QE stuff, life is too short, but we should have printed the money and given it to loacal authorities for building social housing.

Posted By: WillInAberdeenSo it seems from the Autumn Statement that renewable and nuclear generators are still allowed to charge over-inflated electricity prices

Of course generators do not *charge* anything - all energy is sold at pan European Auction. Yes they are getting high prices (except those on CFD contracts AIUI) - supply and demand economics. There is an argument they are benefiting from the investment risk they took (do you want them to *not* invest in wind power?).

Posted By: WillInAberdeenIronically, the Treasury will then pay out that money (and more) to subsidise the electricity prices for consumers, so further pumping up the windfall profits, in a circular payment scheme.

Simply no. Power supply companies have no control over the incoming price so have to pass that on otherwise.

Posted By: WillInAberdeenOn that, the continuing fall in wholesale electricity price in November seems to be driven by the ongoing fall in wholesale gas prices,

Yes, classic supply and demand economics. There is lots of LNG near Europe, with nowhere to store it if it was offloaded as the mild autumn has reduce consumption so storage is full.