Energy Prices

[vikingTON]

1 minute ago, MONKMAN said:

Anyone thinking the super-majors making astronomical profits is a new thing, are living on another planet. These companies (one of which I work for), historically the largest and most successful in history, are basically cash machines for their shareholders. 

They're literally record profits though. As in 'unsurpassed by any of their countless previous bouts of looting'. 

[Satoshi]

21 hours ago, MONKMAN said:

Shell are one of the largest companies in the world, haven't missed a quarterly dividend payment in 80 (Eighty) years and in the last 20 years have paid out $200 billion to shareholders.  To say they're drastically unsuccessful is IMHO (in my honest opinion), utter shite. 

Their share price is drastically unsuccessful (and the share price is a reflection of the belief in future dividends to be paid).

No doubt they're a survivor though, and I expect they will be around for another 80 years. However, as a blue chip company to invest in they are one of the worst choices of the last 20 years (Centrica is worse).

On 29/07/2022 at 15:38, The Moonster said:

Please stop. Shell have assets of $405 billion. If they were hard up they could sell those off and let someone else take on the horrible and money losing task of selling gas. They don't, they add more and more assets and post bigger profits in the billions each year. You can say "but but but its not the gas they make money from" all you want but the fact is people are going to die from these price rises. I couldn't give a f**k if their share price is 25p or 25 grand, they can quite clearly afford to make a bit less profit than they currently are. They are plunderers, they don't give a f**k about the environment or your average person on the street, people are quite right to call them the c***s they are. 

This reminds me of when McKinsey recommended to Shell around 10 years ago to sell their downstream division. After all, the return on equity was far higher in the upstream division. This is true, but missed a crucial point. The whole rationale behind being an integrated oil and gas company is that your downstream assets are a hedge against your upstream. When the oil price tanks (as it will always do in a cyclical industry) your downstream arm becomes more profitable (and vice versa). It's no coincidence Shells current CEO came from the Downstream division, the cycle was turning when he was hired. Selling gas does make money overall, but the margins will be non existent or negative when the price is low.

BG Group was an upstream only offshoot of Centrica, it once had the 6th highest market cap of any UK company but crashed and burned when the oil price dropped (and was conveniently bought by Shell).

Shell won't sell commodities at a loss (because it would just go out of business, it exists in a competitive market after all). For the same reason why the oil price is low people aren't voluntarily paying more. This isn't how business works. 

On the assets, Shell (along with most oil and gas companies) is clearly pivoting towards being an energy company. Shell is one of the worlds largest renewable energy companies (and Centrica going this way too).

Shell left the Netherlands for a number of reasons but one of the crucial ones was that it was clear they weren't welcome any more, the top pension funds wouldn't invest in them anymore and they were subject to weird tax arrangements. So they came to the UK. If they are being attacked a lot in newspaper headlines they may eventually leave the UK too. The project figure you saw - only a small proportion of Shells profit is from the UK market. They don't need to operate here, many other super majors don't bother.

Apple is a far more profitable company than Shell, it's far more successful for it's shareholders too. Shells share price has been stagnant in the last 20 years, Apples has grown 130x. If you want to argue about profit and rent seeking you should maybe look at the (many) other companies who are actually becoming more valuable.

But as I mentioned at the start, people don't want to pay anything for their gas because it brings them no joy, they will happily pay many multiples of the cost to produce an iPhone because they like it. The product is why certain unsuccessful companies are viewed as more greedy or rent seeking than other far more successful companies.

The intent of the post above isn't to change your mind, I know it won't, but it's to give some context to the idea that Shell / Centrica are these profit hoarders who extract rents on society. The reality is these are companies that have made their owners poorer over the last 20 years despite having the worlds biggest bull run in that time. It's context, ignore it if you want, but the reality of it doesn't change.

On 29/07/2022 at 15:37, 101 said:

A pension pot should be adequately diversified so as not to get overly concerned when the government recoup unearned profits. The whole theory of a capatalist society is it rewards risk and innovation, Shell have demonstrated none of these characteristics in order to generate this latest mammoth profit it has been pure luck.

If they had designed some way to remove and capture methane from manure and introduce it into the gas supply of Europe then they would have been worthy of a huge profit but all that's happened is the resource they drill for and sell has gone through the roof and they are cashing in, if the price had fallen they would have continued to drill for gas.

First sentence is accurate.

Second not really, all supermajors have massive (and at least reasonably successful) R&D Divisions. The commodity cycle isn't pure luck, they (broadly) lose when the price is down and win when it is up with the integration as their hedge. There is a correlation between oil price and share price of supermajors but it isn't as direct as you think, Shells share price was higher in 2018 than 2014 despite the oil price being a far bit lower.

Supermajors tend to drill less when the price drops (even know the cost of drilling goes down).

If you take away the profits supermajors make from the upside of the commodity cycle, the business of upstream oil & gas will pretty much cease - nobody is bailing them out when the commodity price is low. You may think this is a good thing, but it's almost universally agreed that gas at least will be an important bridging fuel in the energy transition (it is relatively clean burning and known reserves have 100s of years to go).

I'm not for or against either of these companies, it's a matter of proven fact that both have done many bad things in the past. You may think they are rent seeking but that doesn't easily tie with their dire share performance. You may think they are evil but it's clear European super majors (Shell, BP and Total) behave very differently (and clearly better) than their American counterparts (at least in the last 10 years or so). All three are amongst the worlds largest renewable energy firms.

Like everything else there is shades of grey, look deeper than the headlines. 

BP avoided the headline treatment because their results come on a different day, their share price performance is also horrific, they are worth 40% less than they were in 1999.  Microsofts shares are worth around 8x more over the same time period. 

Not questioning the dividend of Shell, some investors prefer to have dividend heavy stocks rather than growth stocks for tax reasons. The share growth performance of the various companies mentioned has been dire, not their dividend payout.

Edited July 30, 2022 by Satoshi

[throbber]

10 hours ago, MONKMAN said:

Anyone thinking the super-majors making astronomical profits is a new thing, are living on another planet. These companies (one of which I work for), historically the largest and most successful in history, are basically cash machines for their shareholders. 

^^^
 

 

[SuperSaints1877]

21 hours ago, oaksoft said:

Actually in all the "excitement" of wondering how much more we'll be paying by January, it is going to be interesting to see wheyher both Gas and Electricity go up by the same amount.

If it's mainly gas which is going up, it might be time to buy an electric shower.

We have a gas boiler heating system but the hot water tank has an electric override heating element installed. We were told only to use that as an emergency I assume if the gas went off.

Please can you let me know when the time is right.

We bought some emergency electric oil heaters when this second phase kicked off in Ukraine in February this year as we were acutely aware of the gas situation getting out of control with Mad Vlad holding Europe to ransom. The idea being if gas becomes scarce or so damn expensive that we have an alternative option to heat certain parts of the house.

If half of the UK gas use comes from the North Sea I say we just go independent now without wasting time on a referendum!

 

[superbigal]

I'm quite happy my gas estimated readings went off the planet when I came of my 2.7p per unit charge and onto 8p in April.
Just checked there and still 600 units behind.
Don't mind having paid in advance at last years prices.
Just got to avoid the meter being read for another year [emoji854]
No fraud was comitted.

[Bairnardo]

This is the first time in history these industries have done it at the expense of leaving people to die.

In this country maybe

[SuperSaints1877]

On 29/07/2022 at 09:04, scottsdad said:

I have escalated my complaint to Scottish Power. 

Not sure if it was this thread where I first posted this, but the story is simply this. In 2015 I left Scottish power and joined OVO. Paid my final bill with SP and moved without too much pain. For 7 years all has been fine, no problems with OVO.  

In June Scottish power sent me a bill for over £11,000 "based on actual meter readings". I checked with OVO who say nothing has changed (ie I am very much still a customer of theirs). I put in a complaint. I got one reply, a week later, from someone telling me they were passing it on to someone "with more skill than me" to deal with. Then I received another bill, for just under £4,000. 

Having heard nothing else, I escalated this. I have to wait 8 weeks from my initial complaint to take it to the ombudsman, but i reckon I might go to the press with this if not resolved. The Guardian have regular stories about people having issues like this with energy companies. 

I believe you have all the evidence based on your previous posts on this subject. With that evidence you can sleep easier at night, but you can imagine that this is not an isolated case and there will be innocent families or OAPs being targeted by such incompetence. 

Good luck in your battle. Keep us updated.

[Zetterlund]

2 minutes ago, SuperSaints1877 said:

We have a gas boiler heating system but the hot water tank has an electric override heating element installed. We were told only to use that as an emergency I assume if the gas went off.

Please can you let me know when the time is right.

We bought some emergency electric oil heaters when this second phase kicked off in Ukraine in February this year as we were acutely aware of the gas situation getting out of control with Mad Vlad holding Europe to ransom. The idea being if gas becomes scarce or so damn expensive that we have an alternative option to heat certain parts of the house.

If half of the UK gas use comes from the North Sea I say we just go independent now without wasting time on a referendum!

 

Currently the average kWh rate for gas is about one third that of a kWh of electric. The gas price has a lot of catching up to do before it becomes more expensive to run (assuming reasonably modern gas boiler efficiency).

[SuperSaints1877]

45 minutes ago, Zetterlund said:

Currently the average kWh rate for gas is about one third that of a kWh of electric. The gas price has a lot of catching up to do before it becomes more expensive to run (assuming reasonably modern gas boiler efficiency).

Thanks. At least I have an alternative if the gas gets switched off. Crazy times.

[Zetterlund]

2 minutes ago, SuperSaints1877 said:

Thanks. At least I have an alternative if the gas gets switched off. Crazy times.

Aye, who knows where the prices are headed but the ~3:1 ratio in leccy/gas price has been pretty consistent for as long as I can remember.

It's relevant to air-source heat pumps as an alternative too, as a properly installed one will typically be around 300% efficient which makes the running costs similar to mains gas. 

[SuperSaints1877]

1 hour ago, Zetterlund said:

It's relevant to air-source heat pumps as an alternative too, as a properly installed one will typically be around 300% efficient which makes the running costs similar to mains gas. 

Is there not someone on the forum that has invested in alternative approaches? If I had the chance in the future to do a self build I’d like to incorporate better solutions to what we rely on today.

[Zetterlund]

1 hour ago, oaksoft said:

That may be true but you also need to take into account which source of energy is the most efficient.

For example, what are the energy requirements to boil 2 litres of water by kettle compared to on the hob? Only then can you tell which is the cheapest method of heating water.

It's almost impossible for the average person to work this sort of thing out and that's before you take into account the fact that gas and electricity meter readings have different units of measure (the non-smart meter types anyway).

You can assume near 100% efficiency for electric heaters vs 85-90% for a gas boiler, so gas is still considerably cheaper per kWh for heating homes & water tanks. A gas hob though is only around 40% efficient so is approaching parity with an electric kettle. As you say though almost nobody will be aware of these things.

4 hours ago, SuperSaints1877 said:

Is there not someone on the forum that has invested in alternative approaches? If I had the chance in the future to do a self build I’d like to incorporate better solutions to what we rely on today.

I'm a heat pump engineer for a living and replaced my gas boiler with one in 2008. In theory they're a good alternative going forward, but I'm a bit sceptical about whether government targets are realistic. Transitioning millions of homes to heat pumps and electric cars is fine if we have the grid capacity, but it's almost never discussed as part of the zero carbon conversation. 

In recent years we've seen some US cities struggling with the energy demand of air conditioning units in summertime. That will be us in winter if heat pumps become the norm for heating homes (although I'd hope our infrastructure isn't in quite as crumbling a state as theirs).

[SuperSaints1877]

2 minutes ago, Zetterlund said:

I'm a heat pump engineer for a living and replaced my gas boiler with one in 2008.

Without the supply and demand issues which are very relevant, what has been your personal experience with having installed one in your home? 

[Zetterlund]

5 minutes ago, SuperSaints1877 said:

Without the supply and demand issues which are very relevant, what has been your personal experience with having installed one in your home? 

I had to upsize all the radiators but it works perfectly well running at 40-45 degrees instead of the 60-65 with a gas boiler. The house isn't particularly well insulated compared to a newer build but the system copes in the winter without needing any additional heat sources. It also heats a hot water cylinder in the loft, and the running costs over the years are pretty much the same as if we'd stayed on mains gas.

If I built a new house my personal preference would be to heat it via air-to-air heat pump rather than air-to-water. Pumping hot water around the house seems an antiquated method now which comes with its own issues. Heating the air directly without first transferring to water is also more efficient. This is pretty common in much of the world but the UK seems a little behind, unsurprisingly.

[Melanius Mullarkey]

2 minutes ago, Zetterlund said:

 

If I built a new house my personal preference would be to heat it via air-to-air heat pump rather than air-to-water. Pumping hot water around the house seems an antiquated method now which comes with its own issues. Heating the air directly without first transferring to water is also more efficient. This is pretty common in much of the world but the UK seems a little behind, unsurprisingly.

How noisy is the pump when it’s running (outside noise)?

How do you think that would translate to a whole row of houses with these running?

[Zetterlund]

52 minutes ago, Melanius Mullarkay said:

How noisy is the pump when it’s running (outside noise)?

How do you think that would translate to a whole row of houses with these running?

They've come a long way in the last 10 years or so to make them more acceptable for residential uses, and have to comply with pretty strict decibel level limits. I think a lot of people walk past chiller units outside shops & pubs and think that's what would be on their house but it's a different technology despite looking similar.

The vibration from the unit is more of a consideration than actual noise levels, so mounting on the ground is better than hanging on a house wall, and generally you'd avoid putting outside a bedroom. Some people put them down the garden and bury the pipework underground.

[Aufc]

BP now reporting £7bn quarterly profits. What a shambles

[101]

41 minutes ago, Aufc said:

BP now reporting £7bn quarterly profits. What a shambles

More than triple the previous year. 

What was the wind fall tax Sunak put in, I don't think it was high enough we should be scooping the excess profit into the public coffers.

[Left Back]

29 minutes ago, 101 said:

More than triple the previous year. 

What was the wind fall tax Sunak put in, I don't think it was high enough we should be scooping the excess profit into the public coffers.

If I remember it was £5bn in total but I don’t expect to see a penny actually raised.  The companies can offset it against green investment. No way are they handing over a penny in tax if they can invest that same money in a profit making venture.

[jamamafegan]

https://dontpay.uk