But Not For Long ...
The U.S. is pushing OPEC to boost oil production. China is ordering miners to ramp up coal output. Russia is pressing Europe to commission Nord Stream 2. The LNG tankers are turning East, as China seeks to boost stocks ahead of the hard winter ahead. Saving the planet will just have to wait but hopefully not for too long.
The fuel crisis is pushing prices higher. Brent Crude closed at $82.54 up from $78.77 prior week. Gas prices hit $6.50 dollars before moving off peak. Prices closed 12% down from the mid week high. The cost of extraction is no mean variable. Hikes and Spikes the real reason for the price performance. The price pattern is beginning to mirror the problems in the lumber region, earlier this year.
Lumber now trades back towards $500 from the $1,500 dollar mark in April this year. We would expect gas prices to ease back, despite stock building in major markets. Prices averaged just $3.00 per unit in May. The markets explain why short term demand exceeds supply but not the full extent of the price ramp.
This week, gas dependent producers including paper, steel and gas met with Business Secretary Kwasi Kwarteng pleading for help with cost prices. They failed to find any solutions in the Kwarteng closet. Production cuts or even closures are on the cards unless the government introduces price intervention to alleviate the cost burden.
"A problem for the Treasury and not the Business Department" explained the Secretary of State, never one to dodge a difficult issue. The recent success with the boost to CO2 emissions was obviously enough in a busy year.
Rishi Sunak at Conference this week explained " The future is here, even if you can't see it yet." No thought of tomorrow? Not really! "We are going to make the UK the most exciting place on the planet." No explanation forthcoming from the Prime Minister's speech, as to how we are to achieve this. The petrol crisis may be easing but dead pigs may soon lie at the doors of Downing Street.
The Russians wants to boost gas delivery to Europe with the opening of the Nord Stream 2 pipeline. Gazprom is seeking a fixed term price contract to avoid spot price exposure for buyer and seller. The EU should accept the deal and not succumb to U.S. pressure to accept North American LNG as an alternative.
"The raucous squawkus from the Anti Aukus caucus" should be a rallying call for the reassessment of U.S. foreign policy and trade policy. Uncle Sam is enthralled by the Eastern promise not the ways of the West.
In the UK, the government should offer a short term price cap for business with a commitment to build gas stock capacity to the European average. "Build back better" should include gas fittings in addition to Johnson's "fibre optic vermicelli" set to assist with the leveling up agenda.
If OPEC open the oil valves and Biden gives the nod to US oil rigs, oil prices could move back into line and ensure the talk of $100 dollar oil is removed from the agenda once and for all ... the price crisis could be over by Christmas ... households will have enough gas to defrost the foreign frozen turkeys imported from Poland and France ...
| 
