The energy crisis

[ianch99]

The fantasy of the free market applied to Infrastructure assets is well & truly over. Only the shills for corporate greed will continue to sell this deluded fairy tale.

LNG glut raises prospect of lower UK energy bills

UK wholesale gas prices have tumbled amid an unprecedented surplus of liquefied natural gas, raising the prospect of lower energy bills in the autumn.

High LNG import volumes from the US, Qatar and Algeria that the UK pipeline system cannot move to mainland Europe quickly enough, as well as a decline in demand caused by a warm spring and an increase in wind power, have left the UK with a glut that is driving down prices.

The really funny part is that the UK will not get the lower prices, Europe will

However, most British utilities buy their gas supplies in advance, meaning they are paying high prices locked in months ago, with the discount on UK gas over European supplies only stretching out to September. Samantha Dart, head of natural gas research at Goldman Sachs, expects UK prices to rise as LNG imports ease, as opposed to European prices falling significantly.

Octopus Energy, which has 3.2mm customers, said it had already bought gas for customers for the next six to 12 months, “so sadly neither we nor our customers will benefit from short-term drops” in the wholesale gas price.

[Jaymoss]

Originally Posted by tweetiepooh

Interesting that in good times we want government to keep out of the way, keep tax low and so on. But when hard times hit they need to apply taxes and help out.
Surely we need to apply taxes during the good times to build up surplus and then we have something available to provide support when the hard times arrive.

TBH imo windfall taxes for those making obscene profits should always be in place

[Sephiroth]

Originally Posted by Jaymoss

TBH imo windfall taxes for those making obscene profits should always be in place

But then won’t they simply locate their profit HQ to a different tax jurisdiction? Better they pay corporation tax here.

[1andrew1]

Originally Posted by Sephiroth

But then won’t they simply locate their profit HQ to a different tax jurisdiction? Better they pay corporation tax here.

It's worked before and they didn't relocate but if you did it every year they might. Don't forget, we're lagging behind some of Europe on this and Italy has introduced a windfall tax

Also remember in this case it's profits they didn't expect to get, so it shouldn't impact on them too much - just restoring their profits and dividends to what they forecast.

[ianch99]

Originally Posted by Sephiroth

But then won’t they simply locate their profit HQ to a different tax jurisdiction? Better they pay corporation tax here.

Then they cannot operate as a UK company, selling energy to UK consumers. The answers are straightforward, it just needs the political will & imagination.

[Sephiroth]

Originally Posted by ianch99

Then they cannot operate as a UK company, selling energy to UK consumers. The answers are straightforward, it just needs the political will & imagination.

Why not? Operating company in the UK and its asset centre in Luxembourg or somewhere? Development money is lent from the offshore HQ to the operating company and interest payments back to the HQ company disappear from taxable profits.

[ianch99]

Originally Posted by Sephiroth

Why not? Operating company in the UK and its asset centre in Luxembourg or somewhere? Development money is lent from the offshore HQ to the operating company and interest payments back to the HQ company disappear from taxable profits.

Operate in the UK, generate revenue in the UK, pay tax in the UK. Not difficult to grasp. The imperative is compounded by the fact that they are trading in a fake free market of national infrastructure assets.

[Sephiroth]

Originally Posted by ianch99

Operate in the UK, generate revenue in the UK, pay tax in the UK. Not difficult to grasp. The imperative is compounded by the fact that they are trading in a fake free market of national infrastructure assets.

Are you absolutely sure that companies operating in the UK whose assets have been relocated for accounting purposes to an offshore location cannot escape full UK taxes after all the asset fees have been reckoned in?

[nomadking]

Originally Posted by Jaymoss

Of course it is their fault. Ultimately they are the ones(among others) charging the inflated prices because demand is high. They do not have to they just are. You just have to see their profits to see where the money is going

They don't set the prices.
Link

​Unlike most products, oil prices are not determined entirely by supply, demand, and market sentiment toward the physical product. Rather, supply, demand, and sentiment toward oil futures contracts, which are traded heavily by speculators, play a dominant role in price determination.

[Taf]

The elephant in the room is OPEC. And environmentalists are shouting that we don't need elephants any more.

[Jaymoss]

Originally Posted by nomadking

They don't set the prices.
Link

Argue with me as much as you about it they are making billions while we are getting screwed

Originally Posted by Jaymoss

Argue with me as much as you about it they are making billions while we are getting screwed

They are making billions. We are getting screwed. But it really isn’t BP’s fault, or Shell, or the rest. There’s a global market for oil and gas that ultimately dictates the prices of products derived from those raw materials. Nomad provided a useful link earlier.

It is actually illegal for a publicly listed company to act in a way detrimental to its shareholders interests, so they can’t adopt a policy of selling everything at cost, or voluntarily diverting dividends to the Treasury. Nevertheless, some of the most senior executives involved have stated publicly, as clearly as they dare, given their primary responsibility to their shareholders, that a windfall tax will not damage them or fundamentally alter their future plans in the way government ministers have suggested.

The problem here is that the Conservative party is hostile to windfall taxes on principle. Principles are not a bad thing per se, but it is getting harder and harder to understand their deontological zeal in the face of the mounting evidence of serious financial hardships in this country. A little pragmatism is required, and also a willingness to just accept they walked into the political trap set for them by every opposition party in the Commons by letting them all propose a windfall tax first. There is nowhere else they can readily acquire sufficient billions to take the edge off this winter’s fuel crisis, without racking up even more national debt. They should swallow their pride and get on with it.

[ianch99]

Originally Posted by Chris

It is actually illegal for a publicly listed company to act in a way detrimental to its shareholders interests, so they can’t adopt a policy of selling everything at cost, or voluntarily diverting dividends to the Treasury. Nevertheless, some of the most senior executives involved have stated publicly, as clearly as they dare, given their primary responsibility to their shareholders, that a windfall tax will not damage them or fundamentally alter their future plans in the way government ministers have suggested

And there is the essence of the problem. We have a system that has been evolved primarily for benefit of one party. This has many undesirable consequences, including the disproportionate distribution of wealth to the super wealthy at the expense of the majority. Of course, this system has evolved under the governance & direction of those who directly benefit but just because the system is here, does not mean it is right.

Companies should change their legal obligations to advantage more that just shareholders. They should also benefit employees and the communities from where they generate their revenues. Imagine if a company had a legal obligation not to act detrimentally to employees and customers, as well as shareholders.

I believe that 'acting detrimental to its shareholders' is a very high standard to prove. You pretty much have to be intentionally trying to tank the company for some reason.

[1andrew1]

Originally Posted by Damien

I believe that 'acting detrimental to its shareholders' is a very high standard to prove. You pretty much have to be intentionally trying to tank the company for some reason.

Your more activist shareholders might boot you out at the next available opportunity though!