Everyone hold your left hand up if you think Energy Market Rigging is a good thing?
Now everyone who disagrees hold your right hand up if you think Energy Market Rigging is a bad thing?
You should have decided by now whether you want a rigged energy market or not.
Let's look at both sides of a argument that will rage until the end of time or at least until fossil fuels run out.
If you fix the pricing of energy it looks like a good thing doesn't it, on paper and i stress on paper having a flat fee for natural gas and electricity is a winner, especially when you want votes for a election. The real problem with energy market rigging is that it takes out any level of choice and competitiveness out of the marketplace. Also you take out the possibility of energy companies passing on savings when they purchase their energy cheaper which is dictated by market prices.
The market prices are predicted in a futures market not a equity market, energy companies work on the future prediction of stockpiles of gas and raw materials to generate electricity. So if you're wondering why your gas or electricity bill rises when the company is purchasing it's electricity at a lower price is because the prediction of future stockpiles might be lower than expected, which in turn generates demand and will push the prices up in the commodity market.
British Thermal Unit (BTU), MBTU, MMBTUNatural Gas is measured in USD/MMbtu, the piece above explains what MMBTU means which is a unit of measurement for natural gas. The USD means United States Dollars, which is the currency natural gas is bought in.
A standard unit of measurement used to denote both the amount of heat energy in fuels and the ability of appliances and air conditioning systems to produce heating or cooling. A BTU is the amount of heat required to increase the temperature of a pint of water (which weighs exactly 16 ounces) by one degree Fahrenheit. Since BTUs are measurements of energy consumption, they can be converted directly to kilowatt-hours (3412 BTUs = 1 kWh) or joules (1 BTU = 1,055.06 joules). A wooden kitchen match produce approximately 1 BTU, and air conditioners for household use typically produce between 5,000 and 15,000 BTU.MBTU stands for one million BTUs, which can also be expressed as one decatherm (10 therms). MBTU is occasionally used as a standard unit of measurement for natural gas and provides a convenient basis for comparing the energy content of various grades of natural gas and other fuels. One cubic foot of natural gas produces approximately 1,000 BTUs, so 1,000 cu.ft. of gas is comparable to 1 MBTU. MBTU is occasionally expressed as MMBTU, which is intended to represent a thousand thousand BTUs.
For most people Natural Gas is the most and widely used commodity that is used in your home, of course if you use heating oil that is a refined product, you will pay a different price. People in rural communities use heating oil as they don't have means of piped gas to their homes that is for some rural communities.
There is a lot to go through before you can even approach this argument, another factor to look at is world events, world events can affect the price of natural gas considerably, especially if there is a issue where natural gas is being drilled. At the moment we have two options to drill for natural gas, offshore and inshore which is more commonly known as "Fracking". Where stockpiles are falling in offshore drilling, inshore drilling keeps stockpiles topped up. If we alone relied on offshore drilling for natural gas the price would be sky high as offshore stockpiles are in decline.
Electricity is generated in a number of ways, Wind Power, Coal Powered Plants, Biomass Plants, Tidal Power, to name just a few.
Most Electricity generated in the UK is by Coal or Wind Power and we've just started moving to Biomass.
Physical Energy such as electricity can be bought on commodity exchange such as ICE (Intercontinental Exchange), perhaps the biggest trading house for commodities.
Naturally when buying electricity from a trading house demand and supply will dictate prices, some are fixed prices on a monthly contract others are traded differently.
The general public isn't made aware of all these factors that have been mentioned in this post and we're not anywhere near debating whether a fixed energy market or not is viable, so i will let you digest this information in this post and part 1 and will see you in part 2.
