UK fuel prices

Whenever people ask me about the possibility of us running out of fossil fuels, I usually reply that I’m no expert on oil reservoirs but that there are markets out there that are, and if we were going to run out the price should have been rising rapidly. That probably still true, despite oil prices staying high – according to the FT they have managed to fall to $63.55 a barrel (Brent crude).

More interesting for the UK is the story of our gas prices. Just recently there was a four-fold spike in gas prices (although the spike itself is not much bigger than the brief spike in mid-november); due to a combination of various things: a cold winter, us building an extension, a fire on an important storage platform, and odd problems in importing more from Europe (prices here are significantly higher than there; there is a nice big pipeline under the sea; but the markets are so murky and opaque its near-impossible to find out exactly why they are selling the stuff on the continent instead of making twice the money flogging it to us). This lead to a warning of possible supply interruptions for business customers – apparently large businesses get a somewhat lower gas price, in exchange for a clause in the contract that they are first in line for cuts should they be needed to keep domestic supplies (and therefore votes…) flowing.

All this is down to us running out of North Sea Gas. According to a nice graph in the Grauniad print edition (sadly not in the online one) we are going from supplying 90% of our needs from the North Sea in 2004/5 to about 10% predicted in 2012/13, although that also factors in a near doubling of use by then (actually the graph is a bit confusing so I’d better not over-interpret it). This also includes an increasing percentage of power coming from gas power stations; at some point it might seem a bit silly to be burning large quantities of the stuff for power then having to import it from Russia.

Comments

  1. #1 Meyrick Kirby
    2006/03/15

    From what I understand chatting to people more knowledgable on this subject than me, Britain has not insignificant reserves of oil shale. Unfortunately (or perhaps fortunately) it’s a bit of a bugger to extract, therefore not economically viable.

    Canada has large quantities of tar sands, so I guess the world has plenty of CO2 it can shove into the atmosphere.

    [We have plenty of coal, and maybe oil shale too. This is why we (and the world) won't run out of fossil fuels in a hurry. But... gas is more useful that coal, which is why we burn it, and the UK, at least, is rapidly running out of gas -W]

  2. #2 melior (in Austin)
    2006/03/15

    …if we were going to run out the price should have been rising rapidly.

    Careful not to fall into this common fallacy. Remember, “Past performance is no indication of future returns.”

    [No, but there are people who watch these tings: oil and gas traders make money out of this. If we were running out, then future prices would be higher, which means current prices should be rising -W]

  3. #3 Jon
    2006/03/16

    I think in “Beyond The Thunderdome” the answer is methane. I guess if vegans joke that cows produce more methane than cars CO2 – we could just have pig farms (in England) to produce methane. Not sure how to pipe it though.

    No problem I’m sure all that gas from afghanistan is cheaper to transport (per kg) than Bacon from Denmark.

    Funny how non pig eating countries still hold the largest known (or worked) gas reserves.

    And plenty of gas in North Africa still, though it is all being piped to Spain. Do you think they’ll get their revenge for Trafalgar by embargoing shipments of Gas to England.

    Well as long as France doesn’t embargo Nuclear produced electricity being cabled to Britain, we should still be able to boil kettles. I’m no longer worried about steam and/or water vapour – since you put my mind at rest on that one.

    Still, all the more reason why Britain should go for tidal power (estuary tidal power) from the Mersey & the Thames. I must confess shares in wind power (win turbines) are doing rather well. Thank you All.

    But I don’t want to be the ogre everybody blames for filling the land with windmills, don’t want Quijote or is it Quixote on my case. I repeat these windturbines are now tall enough to be planted in forests, not for trees to be replaced by forests of windturbines.

  4. #5 Max Ballstein
    2006/08/04

    You can’t be 11341 serious?!?