Green 2020 Environment and Energy Newsletter
Welcome to the Green 2020 Environment and Energy monthly news service, dedicated to bringing you the latest in environmental, energy and sustainability information with a major slant towards the food supply industry. To read all of our past articles go to 2011 Articles on the menu bar.
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Articles for March
Chiller Optimisation - getting more out of your chillers for less.
Latest Energy Report
Energy Report for February 2012
Price Overview:
Energy prices continued to rise in February, continuing the rise sustained throughout January after Januarys falls. Gas prices rose 6.7% to 2.25 p/kWh and electricity prices rising 4.8% to 5.51 p/kWh. Oil prices rose 9.2% to $121/ barrel, coal prices fell 5.0% to $98/tonne and EU carbon permits rose 7% to €8.37/tonne.
Price Drivers and Risk:
Energy prices were driven by continuing positive signs for the US economy along with the latest finance package agreed with Greece averting disaster and Chinese monetary loosening. Energy markets remain unsettled by the ongoing brinkmanship by Iran over nuclear development and increasing risks to supply through the Strait of Hormuz.
Oil prices continued to rise as global economic risks eased with stabalising developments in major global regions. US economic data has been improving consistently for a sustained period, ahead of expectations. The European sovereign debt crisis has eased after the latest bail-out and the European Central Bank continues to pump their banking sector with unlimited cheap funding through new long-term refinancing operations. China has started to ease their monetary policy to maintain growth levels as inflation remains under control. However, signs of economic stabalisation are at an early stage and considerable risks and uncertainties remain.
Another driver forcing oil prices to rise is the continuing political stand-off between Iran and the West over their nuclear interests causing increasing instability and uncertainty, particularly from the threat of Iran blocking supplies of oil and gas through the Strait of Hormuz. Iran also reduced exports to Europe early in response to Europe’s planned embargo in July, unsettling the market. Armed conflict or continued disruption in the region would cause serious supply blockages and price spikes. About 20% of UK gas supply comes from Qatar via the Strait, any disruption would cause price spikes on top of higher oil and gas prices.
The UK has experienced record oil prices and have hit all-time highs in Euro, dollars and sterling. These levels surpass the July 2008 $147/barrel levels due to lower exchange rates against the USD. Economists are concerned the stabalising economy may be choked by these high oil prices so early on in the recovery phase.
The recent spate of cold weather across Europe and Russia saw energy prices spike as fears over supply increased as Russia cut off its exports to help it cope with increased domestic demand due to arctic conditions. Gas supplies in Europe suffered with countries resorting to withdrawing supplies from storage. This led to a two-day price spike in Europe and the UK, as high as 100p/therm, double normal price levels.BuyEnergyOnline Views:
With signs of stabilisation but continuing uncertainty, we believe 2012 will experience volatile price swings that may reach low price points sometime this year similar to January’s low points. UK prices may start a long upward trend in 2013 as the global economy stabilises with possibly US-led recovery commencing in 2014.
BuyEnergyOnline Recommendations:
Wait for dips or corrections in the market price before locking away electricity for up to three years or even longer in the event of a big correction. Gas prices carry a deep spot price discount so prefer flexible purchase contracts to access spot prices, unless a big correction presents an opportunity to lock away prices forward.
With summer on its way, or perhaps this week is our summer, so consumer and business optimism improves. I have always seen the periods between February and June and September to November to be the most active in trade and this year in particular i believe will be a good year for all.
In pretty much all of the meetings i have been in over the last few weeks there is a sense of 'bad news fatigue' and a realisation that if we are going to grow our businesses then we just have to get on with the job of doing so and come out from our bullet proof shelters. In our business we have done the same, we have made some big improvements that have really set us up for the future so that now we can concentrate on growth and supporting our clients.
Budgets and budget whitewash - The latest budget was reasonable but to be honest there are two bug bears that i have, fuel duty and the HS2 rail link between Birmingham and London. With the money for the HS2 (to save just 30 minutes journey time on the train) that money could be spent on lowering duty and pressure on businesses particularly the broader context of taxation. £43 Billion could do a great deal for business, particularly smaller businesses.
Well, thats enough moaning from me, and lets give big cheer to optimism and a prosperous year ahead.
Philip Emsley CEO
Electricity and Gas Prices - Jan 2004 - Present
