Tom Haddon

At what price point do you get uninsured tankers routinely YOLO-ing through the Strait?

That's what I want to know.

Price cap out by Easter.

Fuse being able to service customers with nothing more than an LLM prompt guide pamphlet in by May.

Turns out he was the chosen one:

Here comes the market. It never fails.

On the left: US LNG shipments reaching ever greater highs.

On the right: European storage withdrawals all but ending. (ok, bit more weather related that one, but price signals play a part)

Absolutely higher bidding will happen, but the upwards death spiral just won't happen.

Gas isn't as integral to the Asian energy system as it is to the Northern European.

1st para: Yep, believe that.

2nd: Erm, ok, maybe. Seems far fetched.

3rd: Are you high? Been the non-existent threat for the last 4 years. The Asian markets just substitute.

4th: OK, we're back on Earth.

5th: Agreed.

It's like a bell curve of mental thoughts.

That's a yellow card. VAR may get involved to upgrade it, be careful.

bsky.app/profile/tomh...

My theory:

Macro people look at crude markets (over supplied, fairly benign)

Energy people look at product markets (oh god did another refinery just blow up?)

I'll leave balancing mechanism chat for another day (as we then enter into BESS vs gas vs LDES vs stability vs all sorts) but so far there has only been one (as far as I'm aware) effort to look at quicker alternatives to 'break the link':

bsky.app/profile/adam...

On the current course, gas will be forced out of setting the price (as Ed's original thread shows, but it is gradual). So we will all cheer...right?

Maybe not as gas will then be dominant in the balancing mechanism as it has barely any opps in wholesale, introducing more market power issues.

Feels like I will forever be tapping the sign when this inevitably continues to crop up over the next few days/ weeks as gas remains volatile to say the least:

The result is...

You still get the market clearing pretty much at the SMRC of gas, but you also introduce instability of bidders maybe getting it a bit wrong and then trying to pull out of a settlement periods or just doing unpredictable stuff.

It's a terrible, terrible idea.

So every other generator can do it too. That will tell *everyone* if gas is going to be the most expensive in a settlement period. So given market physics haven't gone away i.e. NESO must balance in real time, why wouldn't you just bid a smidge under the SMRC of gas as NESO will buy you anyway?

Well, the alternative that most commentators implicitly suggest to break that link is that every generator bids into the wholesale market at their own SMRC and gets paid that, so in effect no single clearing price.

Well, Ed's calculation above is pretty simple (no offense intended in that!)...

Good thread to get a grounding in respect to gas setting the price, but below shows exactly why anyone who says "just break the link to gas" is at best uniformed, at worst completely silly.

It is really not hard to guesstimate the SMRC of gas. So what does this mean?

Well...

There will be a huge amount of fingers hovering over the button to open a short position. Just that it will be very easy to get it wrong...You would be a braver person than I to be trading this market right now.

Of course, any statement starting with "So, ignoring the war issue..." deserves to be thrown out with the gift of hindsight!

So, ignoring the war issue and (potential) shut in of QatarLNG production etc etc, a short case did exist in that the EU may well further unwind semi-mandatory storage targets over summer, plus the growing 'wave' of LNG coming to market with Golden Pass starting up in the US.

So not totally absurd.

Stolen graph (credit bottom right), but seemingly the 'market' wasn't great at predicting events last weekend, with a lot of short TTF positions in play.

Suggests at least some of the crazy price action on Monday/Tuesday was short covering, probably in quite a panicked fashion.

I think it's a driver at home, i.e. cancelling offshore wind developments (even in development) which seems to be because they think coal / gas is the best bet.

Nowhere near enough control of UK/European markets to have that effect so it's just grievance this side of the pond.

Are logistics a big driver of supermarket costs? I would have assumed it is marginal.

Supermarket / food inflation cost drivers were coming from upstream energy and fertiliser costs as far as I'm aware but really not my area to be honest.

Latest on 'tighter than a drum':

Product markets are really where the action is right now on the oil side.

When I'm in charge and the energy wars really kick off, there will be no credence for collateral damage. You're elderly neighbours will be down the lithium mines with the rest of them.

Sorry, but they are the rules.

I have a special disdain for diesel drivers, knowing the harm the dirty little beggars do. If an EV is out of your reach, fine, a Euro6 petrol is available but very very few excuses for diesels on the road these days.

Full context: not checked the veracity of the post but...

Markets are calming down, front month gas down 12% so far today (still 56% higher than Friday), which suggests it might not be as bad as the all caps approach might suggest.

The guy sat next to the empty seat bathed in light at the back - looks as if someone has already been snatched from it.

Ah, poor* diesel drivers. You may well just be about to find out how much European supply of diesel got switched from Russia to the Middle East (& India) a few years ago.

Product markets are potentially going to go tighter than a drum if disruption continues.

*tiny violin plays the hits

Or Brearley is the chosen one.

Chosen for what, I'm not sure. I didn't know [insert your deity of choice] had much of a position on energy market policy and design.

Broadly speaking: a lot.

ME disruption doesn't directly impact UK/EU security of supply (most physically goes to Asia) but it does mean that European hub prices *have* to increase to force US LNG to not fill the hole in Asia and keep coming to Europe.

US LNG is the big winner here.

So just goes to show that you can set your system up to have big optionality of supply (GB has North Sea, Norway pipeline and LNG from US, Qatar, other) but impacts can skewer even the most diversified risk management approach.