Gas: They Want Our Bacon!

Pivotfarm's picture

It has just been released that the UK came within 6 hours of seeing itself deprived of its eggs and bacon as gas supplies across the entire country depleted to danger levels on March 22nd. That meant that had it gone below that level and had the country not managed to get that supply flow open again, there would have been severe gas-supply cuts to many households in the country. But, it’s not only why that was allowed to happen that springs immediately to mind, but we might also wonder why that wasn’t revealed by the National Grid (that keeps data on the supply of gas in the UK) to the public before a few days ago.

Contrary to what has been reported recently, new investigations have just been released to show that the energy suppliers of the UK were in actual act withholding gas supplies from the country and have been accused of market manipulation. Prices have soared over the past two years for gas.  Wholesale gas, which supplies both households and also electricity generation (so there is a knock-on effect from gas to electricity) are now at 70p per therm. That is a fall, but it’s still cooking up a storm. That price is way beyond the previous highs that we have seen. This time last year, prices stood at 57p. May 2009’s price amounted to a mere 28p per therm. Some are saying that energy produces are holding back on the goods in an attempt to control the market and up the prices.

The Liquefied National Gas terminal near London (Isle of Grain site) is used by BP and other major suppliers such as Centrica. On the very same day that the British ‘cuppa’ nearly ran dry because the country could only boil six hours’ worth of kettles, that terminal had a reserve of 40%. Similarly, the Liquefied National Gas site of South Hook (Wales), supplied by Total and ExxonMobil, had a reserve on the same day of 52%. Prices have now fallen to 70p a therm, but on March 22nd they reached the record high of 150p per therm. Were they in cahoots? Have they been manipulating the public, the state and the market?

Energy suppliers have issued statements that prices in the UK may have to rise again to cover increasing costs in the industry. The British Department of Energy and Climate Control is now threatening those suppliers with a state intervention in price control to maintain supplies to British customers, unless the industry gets its act together. BP has already been landed with a fine amounting to hundreds of millions of dollar in the US and some are calling for the same sort of action in the UK in an attempt to halt market manipulation of prices. BP was fined in 2007 and had to pay out the hefty sum of $373m to the US Department of Justice (for environment crimes and fraudulent trading agreements). Between April 2003 and February 2004 they were found to have fixed prices and manipulated the propane market. It was the highest fine ever imposed by the Commodity Futures Trading Commission (CFTC) in the US.  It was a sign back then that the Commission and the US Department of Justice were not prepared to accept market manipulation. The British government has not been so categorical and it looks like energy suppliers have been cooking the market price in a fry-up of greasy manipulation in the UK.

However, it has already been brought to light that three of Europe’s largest oil exploring companies (Royal Dutch Shell Plc., Statoil ASA and BP Plc.) are already under investigation from the European antitrust regulators of the European Commission for price collusion, causing prices to inflate. The British government has stated that oil companies will need to cooperate to the full with the European Commission in the investigation over price-fixing. They have allegedly fixed prices and distorted the market since 2002. BP has already posted a first-quarter profit in the region of more than $4 billion this year, earning more than 30% over what experts said they would. Not bad for one of just many of the companies that has been withholding gas from the UK in a bid to get more money and boost prices in an already over-inflated market. What will they be asking for next? Suppose they’ll be wanting their cake and to be able to eat it. Let’s hope for all of us that the EU Commission hits them hard and that prices come back to where they should be!

Originally Posted

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Augustus's picture

Before trying to whip the energy companies, it might be worth while to actually look at what the supply capability from the terminals is rated to be.  The LNG at the terminal must be returned to a gas before it can be put into the system.  And the other factor to consider is that these LNG terminals are not supposed to be the supply source for the country.  That is primarily done with the North Sea production, resulting in these LNG facilities only being a relatively small component of the supply.

Bananamerican's picture

gotta love those "Free Markets™".....and people bitch about supply disruptions under Socialism here...sheeeeit

Augustus's picture

Of course the root of the problem in the UK is that they are just a bit further along on the socialist path.  Shut down operating power plants, switch to solar, wind and NG.  Make no provision for adequate NG supply.  Of course, some of the blame must be recognized as the effect of Global Cooling now underway.

steveo77's picture

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BeetleBailey's picture

Eh....I'll just have me bangers and mash luv.....bollix....

booboo's picture

and afterwards ow bout some spotted dick for kicks.

Seer's picture

The PROBLEM lies in a lack of diversification.  Sure, locking in to single-solutions provides good economies-of-scale at one time, but since nothing lasts forever...

People have no choice but to face a future in which energy costs consume larger amounts of their budgets.  Manipulations aside, this has been the way for most of the world throughout history (and is today).

We spend a LOT of energy trying to make things stable.  As we've grown we've required ever-increasing amounts of energy to maintain this stability.  Eventually, however, we lose to entropy.  Not planning for this eventuality IS poor planning: we don't plan for this scenario because we'd have to face the reality of no more growth (likely lots of reduction in population), something that goes against the massive indoctrinations that have been instilled in us (that keeps the ruling hierarchy, which disseminates the propaganda, in place); one mechanism/shield they've used is to get us to point at each-other rather than AT the System (can't question the premise!).

CustomersMan's picture

Note: Another of the "F*ck Consumer" moves by Big Industry and Oil Co's


"The holy grail of automotive technology is the 99-mpg car. Although the technology has been available for years, automakers have deliberately withheld it from the U.S. market. In 2000, the New York Times reported a little-known fact, at least to most: A diesel-powered dynamo called the Volkswagen Lupo had driven around the world averaging higher than 99 mpg. The Lupo was sold in Europe from 1998 to 2005 but, once again, automakers prevented it from coming to market; they claimed Americans had no interest in small, fuel-efficient cars."


From:  "

The 18 Most Suppressed Inventions Ever"
Augustus's picture

We know that consumers wanted a Lupo because the Geo Metro was such a successful auto introduction.

Seer's picture

Road construction, road maintenance, tires, components for any car- OIL.

The problem isn't with energy for transportation (though transportation is very important, for shipping goods), it's for all the other stuff.

The "Lupo" ain't going to transport my feed (and materials), diesel powered (which I prefer) or otherwise.

MeelionDollerBogus's picture

a scaled up diesel engine would, however, for much lower fuel cost than normal.

stormsailor's picture

i see the free marketeers sounding off.  if there were a "free market" i would agree.  but the corporations have bought the politicians, and the regulators, just like in every other industry in the world.  so there can be no "free market".  then the few remaining players can collude at will.


the us laws that were written to prevent this "sherman ant-trust laws". are sitting in a corner somewhere  covered in dust and cobwebs.  they were written to stop this sort of manipulation by corporations, at the time it was oil companies and railroad companies.


a corporations only reason to be is to make profit. eveything else morality, compassion, prudence, integrity are impediments to the making of profits.


so this entire story is about,  water is wet, the sky is blue,  women have secrets.

Jumbotron's picture

"a corporations only reason to be is to make profit. eveything else morality, compassion, prudence, integrity are impediments to the making of profits."


Amen and again I say....Amen .

You're going to be ruled by politicians or corporations.....welcome to Prison Planet.

Seer's picture

"laws"...  Made to be rewritten and violated by the connected/well-to-do, always were and always will be, for govts are created FOR them.

Do people demand a really just system? Well, we'll arrange it so that they'll be satisfied with one that's a little less unjust ... They want a revolution, and we'll give them reforms -- lots of reforms; we'll drown them in reforms. Or rather, we'll drown them in promises of reforms, because we'll never give them real ones either!!

DARIO FO, Accidental Death of an Anarchist

F. Bastiat's picture

The Brits fell for the primitive superstitions of socialism right after WWII; I've no sympathy for them, frankly.

Socialism kills.

Sandmann's picture

Surely the most stupid comment today ! Gas Supply is PRIVATE in the UK. It is where Enron learned how to manipulate the market. The Market failed to build any storage facilities - in Germany and France where Socialism rules they were told to provide storage so they could buy N Sea Gas in Summer and export it to Britain in winter at high spot prices.

Have the US Socialists fully deregulated gas yet ? It used to be cheaper in MA than in TX or LA because of regulation of interstate pipelines.

TThe country that really chose Socialism has the world's largest Gas Supplies and a mega corporation called Gazprom

SAT 800's picture

Yes; what you say is correct. It's actually where the founders of Enron discovered that there was a whole new game of "make believe" free market that could be played; that depended on carefully manufactured complexity, government overseers who didn't need to be bought off,  because they were cluless, inert, not very interested, only in the job for 4 years; etc. The British Energy Disaster; which was brought about by nationalizing the Electriicty business in Grt. Britain, was a driving inspiration for Enron; who went on to financially destroy California; by plan; by design, by lessons learned by watching the smart and ruthless capitalists gut the british public. An important element in t he private operation of energy companies is the lack of long term investment; and investment in storage capacity, which is an example of this; the Nation is willing to invest in long term infrastructure; the private "operators" are willing to rip and run. If you could afford to buy an electrical generating plant and then simply run it into the ground; literally; you could retire with millions and millions of dollars from your adventure. Of course, the people who had depended on the generating station would be utterly screwed, but this is of no concern to the hot capital capitalists; about the only kind we have left, now.

Seer's picture

Pardon the pun, but this is what POWER does.  Capitalism, socialism, "free trade," whatever., doesn't matter, attraction to power means someone is going to get burned (that's the entire premise!).

BTW - Thanks for providing this information about Enron's first foray into manipulating markets, most people are not aware of it (though I am).  Another shining star from Texas (WTF?).

Jumbotron's picture

"Another shining star from Texas (WTF?)."

4 words......George Bush.....Rick Perry.  'nuff sed.

F. Bastiat's picture

If you don't have overall free markets, it's impossible to make a reasonable claim that one particular market within the overall socialist system is free.

To even make such an outlandish assertion illustrates a striking inability to analyze the inter-related complexities of the modern world.

SAT 800's picture

No; you're wrong. In fact; t he British energy story; gas and electricity supply; provides a wonderful example of completely and utterly free market destruction and rapine. "The Socialist System" just divorced itself from this business sector under the charming delusion that private companies would actually compete with each other, and the market would regulate itself, etc. etc. What actually happened was a disaster; a completely free market disaster, engineered by independent non-socialist capitalists who were much smarter and tougher and more ruthless than the notional government "supervisiors" they were left with; who actually did nothing at all.

Augustus's picture

The Brits were in a hurry to close the coal powerplants.  They did not make provision for alternative energy sources to replace that supply.

Seer's picture

Governments exist therefore "free markets" do/can not exist.

Idealism is nice, but it's only really an idea.

NOTE: I advocate for NO governments (other than any that a given local populace might support).  History supports this "idealism" (refer to what most degradingly call "tribes").

theprofromdover's picture

The two-faced Tony Blair when Labour won the 1997 UK election, promised green energy for all, and made no plans for replacing old coal, oil and nuclear power stations with new cleaner technology. He started to shut old generating stations, and thought solar panels and wind turbines would satisfy the demand. Maybe global warming was supposed to bring sunshine and steady winds to the UK.

After a few minutes, it was clear that the plan was completely incompetent, but he carried on for another decade, eventually conning the chattering classes that nuclear power was 'risk-free and low-carbon'. He even fooled James Lovelock of Planet Gaia fame. But meantime, the Uk had sold its nuclear expertise. Now, in desperation, it is placing orders all over the world for nuclear power plants to be located around the UK coast, but years too late. UK will have power cuts in 2017, but will meantime treble energy bills to encourage the people not to use electricity, and to subsidise the green initiatives.

When the wind blows, they cannot switch off the conventional power generation, so most of the wind turbine energy is wasted. They cannot pump it up beyond the hydr-electric dams, because they forget to build enough high altitude lakes (lochs). They never developed the tidal energy-capture systems seriously enough.  The UK hasn't had any government competence since 1997 (and probably for 40 years before then. The City of London must want an energy crisis, since they run the country.


scraping_by's picture

Tony the Poodle was depending on what Ronny Raygun used to call 'The Magic of the Marketplace.' In other words, clever corporate management would rush to create all necessary assets and infrastructure in furtherance of private profit.

Complete fiction. Most private infrastructure projects are subsidy-sucking con games. If it's existing government infrastructure, it's the old loot and scoot. In either case, government projects can use private companies for expertise and resources, but only if they can remember to write miles of regulations on the lookout for fraud.

What's Brit for 'Snake oil salesman?'

MiniCooper's picture

This article is utter rubbish. I live in the Uk and I am an independent expert in the gas and electric industry and I do not work for any of the big energy firms.

The UK gas storage capacity (which is very very small compared to total demand) had 6 hours reserve left but the UK gas system is connected to continental Europe and LNG terminals as well as the North Sea. These were still available. The UK was not cut off from those suplies. The gas storage units were empty because it is spring time when they are normally running low and we had a freak cold spell of weather that was VERY unusual. The fact is the market immediately responded, prices went up for wholesale gas and 2 very large LNG tankers arrived within days. There was no shortage of gas at all and never would have been. LNG is widely availabe and from dioverse sources and it arrived in response to market prices.



Jumbotron's picture

"This article is utter rubbish. I live in the Uk and I am an independent expert in the gas and electric industry and I do not work for any of the big energy firms."

"There was no shortage of gas at all and never would have been."


As you say up there....BOLLOCKS !!!   There is a shortage and there ever has been....of NON-PRICE manipulated gas.  Market prices.....what a complete moron you are no matter if you work in the corrupt system or not.  There has never been nor ever shall there be a " FREE" market.  There is now the Klepto-Market...but certainly not a Free Market.

THE DORK OF CORK's picture


Not according to the British March  energy trends publication

Imported  steam coal has done the heavy energy lifting as gas turbines were switched off in 2012.


Indigenous production Y2011 : 526,030

                                Y2012 :  451,977



Japan was eating most of the Qatar LNG pies in 2012

British LNG imports

Y2011 :  270,733

Y2012  :  148,224

                   -45.3  %


Norway gas filled some of the hole but total demand was down

Total demandY2011 : 905,759

                    Y2012  : 854,791

                                -5.6 %

HalinCA's picture

So do you think it is in the national interest of the UK to be so dependent on 'just in time' gas supplies?  Or is this a vulnerability your politicians have to dance around anytime they see political actions on the continent that are going against what the citizens in the UK want?



Given all problems with un-assimilated immigrants in the UK I would say a 'just in time' gas supply system is a horrible predicament to be in. 

Seer's picture

Britain/UK is fucked long-term because it doesn't have energy to support its current populace, let alone increases in it.  All actions other than embarking on the establishment of sustainable footings (whatever they might be- I don't foist "solutions" on people) will be no more than shuffling the deck chairs.  Larger reserves only works up to a point: there's loss over time, which means you HAVE to use it; and when you do deplete there's the assumption that you can REFILL, that you can afford to.

I've got a "reserve" tank of propane.  I haven't been refilling it since I installed a wood stove; but, I KNOW that one day I'll have to refill it, as I use it to cook with.  Pretty sure that the day will come when I cannot afford to refill the thing.  Since I have wood, and since my wife can cook over wood, I do have an alternate.

ebworthen's picture

So you're saying there is plenty of LNG but the gas only arrives after an artificial shortage has been created and artificially high prices put in place.

SAT 800's picture

Exactly; both the "shortage", which is only apparent, or stage managed; and the high price are artificially created by the private companies that profit from this.  What no one understands is that if they went back to British Gas; a national state run operation; the whole problem would disappear. They can't understand it because of buzzword "thinking". Some functions of a modern country should be run by the State. Mexico; for instance "suffers" terribly from low fuel prices and low electric bills; because the oil and electricity are supplied by government "monopolies"; which don't make a profit; or jack up their share prices; or buy private jets for their "executives"; and etc. And this fact is readily available to you; you can look it up if you want to. The actual cost of generating electricity and getting it to your house, is a fraction of what's on your electric bill.

F. Bastiat's picture

Who decides what should be run for whom? And by who.

Who, whom? As Lenin asked.

Which is precisely why the primitive superstitions of socialism have never stood and can never stand.

Encroaching Darkness's picture

"Some functions of a modern country should be run by the State." No, as few as possible should be. Abuse of power by States is unending, and should not be rewarded or expanded.

The State will not do anything except botch it up a hundred thousand times worse. The State will. in order to protect itself:

(1) Declare what price and supply of the controlled commodity (here, natural gas) will be available, at what times, in what locations. This will create shortages and excesses, because in a world of imperfect information, the central planners will see to it that their cronies and friends have gas while their political opponents languish.

(2) In order to protect their positions and power, the State will prevent new sources of energy from coming online. See: Bill Clinton's designation of the Escalante Grand National Staircase national park in Utah, because underneath it is high-quality low-sulfur coal that would compete with the interests of the Riady family of Indonesia (one of Bill's best campaign contributors at the time).

(3) In order to drum up support, the State will decree that certain individuals (chosen from among the opposition) are "hoarding", "hiding" or "stealing" energy supplies, and demonize them in the controlled press. This simultaneously inflames the base to support them in "punishing" the "hoarders", and allows them to raise prices during the "shortage", bringing in more money to the State.

(4) In order to maintain power over their own populations, the State will engender conflicts with other States, so that both can blame the other and divert attention from their own inadequacy. Iran has a gasoline shortage? How, they are sitting on enormous oil fields! (hint: someone should have been building their own refineries, but that takes intelligent, educated engineers, sorely lacking due to other incompetencies). But even so, the answer is, Blame America / Britain / the Saudis / the Qataris / anybody but us!

America can't manage an economic recovery? How, we invented the production line / mass production / industrial engineering! But even so, the answer is,  Blame the Iranians / Syrians / anybody but us!

And you want to give these idiots even more power, by granting them monopolies in natural gas supply?

I've only hit the high points. For every gambit you allege by private companies, I can put as many or worse on States. And most companies don't murder their customers, it's bad for business. From Obama's drones to the "security services" to the SWAT teams to the "special forces" (now found worldwide), can you name me a State that DOESN'T murder its' citizens?

"Some functions of a modern country should be run by the State." MASSIVE FAIL.

F. Bastiat's picture

Not only does power corrupt, but it attracts the corruptible.

Hayek wrote a nice piece about it in "The Road to Serfdom", entitled "Why the Worst Get on Top":


Seer's picture

"What no one understands is that if they went back to British Gas; a national state run operation; the whole problem would disappear."


"The actual cost of generating electricity and getting it to your house, is a fraction of what's on your electric bill."

If you externalize heavily...

Don't fall into this trap/category:

Sandmann's picture

Germany was running short too as gas stores were piped to Britain for the higher prices. This article was lifted word for word from a newspaper and came from Crown Estates. The simple fact is that electricity should not be generated from gas, we have coal for that. we used to make gas from coal; now we burn gas to generate electricity in a cold country which needs heat especially when N England is on the same latitude as Nova Scotia

SAT 800's picture

The "actual fact"; which I will take to mean, the one that could actually make a difference in all this, is; that private companies found out they could build gas fired generating plants cheaply and sell the electricity at an artificially high price. A National Electricity Board; which England used to have; would never have done such a thing. The record of consumer prices, or electric bills, under the two regimes discounted for changes in energy supply and inflation reveals the stark facts of the matter very clearly. No decision will be made that is in the best long term interest of Grt. Britain by any private company there temporarily for the profits that has it's headquarters in France or Hong Kong.

Seer's picture

Governments subsidize things and are supposed to be not-for-profit.  Kind of hard to compete with that/this, in which case it should be no surprise that it takes a lot of loopholes in the form of hard-to-detect externalizations in order to get "private" business to come in to the game.

Since govt cannot create anything (well, no business can either- only alter things [ergo, matter cannot be created or destroyed]) it cannot provide energy from which there is no energy store/source available.

Ever stop to think that many KNEW that the shortages were going to come (irrespective) and that it was felt that the complexities were better handled by markets?

So, we have, in your opinion (which I won't dispute- I'm arguing based on dealing with the looming realities) failure of the market, and from others it's failure of govt.  "Two men saying they are Jesus, one of them must be wrong..." [paraphrasing from Dire Straits' Industrial Disease]  I tend to see this as a failure of BIG.  Mother Nature holds the cards, not govt or business.

Rome is burning.  Debating on who is best to hold the fiddle is, well...

Seer's picture

Who is the "we" that you are commanding to not generate electricity from gas?

All things equal I wouldn't hesitate to take NG over coal: NG has a higher energy density.

F. Bastiat's picture

It's been the coldest spring that I can remember, here in Philadelphia.

Seer's picture

[Assuming that your memory isn't bad] I now know where to look for the weather report for the world...

SAT 800's picture

I'm sure that was caused by global warming. you just have to stop driving your cars and then it will get warmer; or colder; or something. ??

Svendblaaskaeg's picture

"I'm sure that was caused by global warming (sarc, got it)"

..and there never was any global bloody warming:

Met Office admits claims of significant temperature rise untenable:

"It has been widely claimed that the increase in global temperatures since the late 1800s is too large to be reasonably attributed to natural random variation. Moreover, that claim is arguably the biggest reason for concern about global warming. The basis for the claim has recently been discussed in the UK Parliament. It turns out that the claim has no basis, and scientists at the Met Office have been trying to cover that up."

QQQBall's picture


Its now "Climate Change"; that way a tax is required if the temperatures change

either way 

SAT 800's picture

Yes; I know. It's very sad. And as usual all the principal actors can be traced down and their employers identified; but the mass dis-information mechanism the so called media works pretty well.

Seer's picture

And you're sure of your position how?

Baby.  Bath-water.  Two different things.

Seer's picture

And there's no such thing as glacial and inter-glacial periods...

I just hope that people know to separate out govt (taxes whatever) from physics/facts.

MeelionDollerBogus's picture

funny, the ice ages we've had on Earth very much say you're wrong.