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- 11 May 2011
Gas Prices To Go Up 25pc Due To Extra Oil Tax Extra Oil Tax Cuts Down Profits of Oil and Gas Companies – During the 2011 Budget pronouncement, Chancellor George Osborne announced that the supplementary charge tax on UK oil and gas production was to be increased from 20pc to 32pc. Up until now oil and gas companies operating in the North Sea were rather quiet about the tax surge but have recently made public that their profits were slashed and energy and gas prices will rise.
The tax increase brought even more insecurity to the unstable UK energy industry. Big suppliers like British Gas owner Centrica, have already warned it may partially shut the UK’s biggest gas field as a result of the tax. Last Wednesday, 4th of May, CEO’s of Britain’s largest oil and gas suppliers tried to persuade the Government to abandon a £10bn tax grab on North Sea energy companies, amid warnings the levy will “utterly destroy” the industry. Speaking to the government’s cross-party Energy and Climate Change Select Committee industry representatives threatened that 30,000 jobs are at risk due to the uncertainty raised by the windfall tax. The Energy Minister, Chris Hune and Justine Greening, Economic Secretary at the Treasury who were also at the hearing stated that the effect on jobs is pure speculation, because the impact on investment was not yet known According to Greening, George Osborne used the independent Office of Budget Responsibility (OBR) analysis to calculate the tax and concluded that the effect in investment will be minor. Writing for the Telegraph, Andrew Lilico, Economist with Europe Economics, and a member of the Shadow Monetary Policy Committee said that claims by oil and gas companies that it is going to shut down the North Sea are just silly. First, let’s remember that Petroleum Revenue Taxation (PRT), including the “supplementary charge” on corporation tax that Osborne raised, isn’t like taxes on widgets or socks or ice cream. It isn’t, as with most taxes, a matter of the government confiscating a portion of someone’s property to use for government purposes (worthy or not). No – it’s the Queen’s oil, not the oil company’s. PRT is simply the way that the oil company pays the Crown for the right to take away and sell that oil. It’s an alternative to a royalty, and can be thought of in much the same way. – Andrew Lilico It is widely known that tax increases reduces incentives to invest and cut down profit margins from companies affected by the scheme. One way or another, companies find a way to pass this to the end customer in order to minimise the effects on their profit margin. Centrica has already stated that wholesale gas price for delivery next winter has gone up 25pc because of the jump in commodity prices but has not yet been passed on to customers. What baffles me about all this is that over the past two year when Brent crude oil prices surged from $80 to $125 a barrel and the profit of these Oil and Gas companies nearly doubled, they kept quiet and even managed to increase oil and gas prices due to one reason or another. Let’s not forget that the majority of the oil and gas being explored today in the North Sea is fruit of investment planning made a little over a decade ago when oil prices were around $10 per barrel. So to say that a 32pc supplementary charge will shut down the North Sea with Oil prices at $100 per barrel is frankly absurd. If you would like more information on our range of energy services or would simply like to find out how this could benefit your business, simply call our energy team today on 0870 710 7560 or request a call back at time to suit.
Or you might want to subscribe for further updates direct from our site.  - 13 April 2011
IEA and IMF Announcements Pulled Oil Prices Down At the start of the session on Monday Brent crude oil was being traded above $127 per barrel and dipped below $125.50 later in the same session, after Saudi Arabia assured it can pump more oil if needed and hopes of a peace settlement in Libya. On Tuesday prices continued to drop after announcement of the IEA and the IMF that crude prices above the $100 are starting to hurt global economy.
The International Energy Agency report showed that high prices are already starting to dent oil demand while the IMF Economic Outlook predicted that US and Japan economies will expand at a slower pace than previously predicted. As both countries are the first and third largest oil consumers the report had a direct impact in oil prices that slid as much as $4 from Monday to Tuesday. At the time of writing Brent Crude oil prices were being traded at $123.56 after falling as much as $2.01, or 1.6 %, to $121.97 a barrel on the ICE Futures Europe exchange in London. Falling oil prices dragged UK gas prices with it and Winter 2011/12 gas eased trading at 73.50 pence per therm and despite a disruption in supply from Norway where a gas field was shut down due to a gas leak, spot gas prices also backed a little and where trade at 59.00 pence per therm thanks to strong LNG supply. May gas contracts prices also registered a slightly reduction and were traded at 61.30 pence per therm down 0.10 pence while prices for the third quarter fell nearly half a penny to 64.30 pence. Despite a secured line of LNG tankers already on its way to Britain gas brokers are concerned LNG terminals won’t be able to compensate further supply disruptions. Backed by lower gas prices, OTC (over-the-counter) energy prices also fell with the MWh being sold at 50.90 pounds, 85p lower than previous sessions. The restart and reintegration to the grid of Hartlepool 1 nuclear reactor on Monday also influenced lower energy prices. If you would like more information on our range of energy services or would simply like to find out how this could benefit your business, simply call our energy team today on 0870 710 7560 or request a call back at time to suit.
Or you might want to subscribe for further updates direct from our site. - 6 April 2011
Brent Crude Hits Highest Levels since Financial Crisis Brent crude oil prices hit a 2 1/2 year high and firmed at $121.06 yesterday. Concerns of a disruption in supply due to the unrests in the Middle East and the lowest US unemployment rate in two years were the major factors for this surge in oil prices. Last time Brent crude oil prices traded above the $120 mark was back in September 2008, right in the middle of the financial crisis. According to some analysts we have reached a “danger point” and if oil prices continue to rise global economy could suffer an inflationary shock putting global growth to a halt. Estimates from the International Monetary Fund suggest that every $10 increase on oil prices shaves 0.2pc off world growth. Before the turmoil started in the Middle East Brent crude oil was being traded at around $98 to $100 a barrel, so with prices now at the $120 mark we can conclude that global growth will retract 4pc, based on the IMF estimates. Over the past few days’ oil prices surged from $115 to $120. Market analysts stated that such increase was a “cumulative impact” of weeks of unrests in the Middle East, especially with military action in Libya showing no signs of an easy resolution. Speaking to The Telegraph Paul Horsnell, head of commodities research at Barclays Capital, said: “Oil at $120 is a psychological level and it looks like it could be a trigger number, with markets suspecting something on the supply side from Saudi Arabia or OPEC. Spare capacity is becoming more limited and there is concern about the next supply outage.” Paul Horsnell wasn’t the only analyst questioned by The Telegraph over the surge in oil prices. In the article “Oil rises above $120: what the analysts are saying” renowned market analysts explained why Brent crude oil prices peaked. What affects will higher Brent crude Oil Prices have in the UK economy? So it has already doubled the Monetary Policy Committee’s 2pc target at 4pc as climbing oil prices could accelerate inflation. The Office of Budget Responsibility has already estimated an increase of 0.5 percentage points in inflation this year due to the increase in oil prices since November 2010. Not to mention other commodities that are directly and indirectly tied to crude like energy and gas. Higher oil prices means higher energy and gas prices. If you would like more information on our range of energy services or would simply like to find out how this could benefit your business, simply call our energy team today on 0870 710 7560 or request a call back at time to suit.
Or you might want to subscribe for further updates direct from our site. - 9 March 2011
Middle East Unrests Continue to Influence Gas Prices UK gas prices climbed to its highest levels in more than 21 months supported by conflicts in Middle East which are pushing Brent crude oil prices close to the $120 a barrel. On Monday Brent crude oil prices firmed at $117.40 a barrel, causing a rally in the UK gas market. Winter gas contract prices climbed to 68.50 pence per therm on Monday morning, the highest since May 2009.
Concerns about the turmoil in Libya, tensions in Saudi Arabia and rumours of the wave of anti-government protests spreading across the Middle East and North Africa, spooked the market early this week. So far Libya has cut off only 2 percent of Europe’s gas supply but as unrests spread to countries like Oman, Yemen and Algeria, the uncertainties about future oil and gas production in these countries increase. “The potential disruptions of gas production in countries currently under social unrest are significant,” – said an energy broker. Higher oil costs push up some mainland European gas contracts and affect prices in the U.K. because of pipeline connections to Europe. Stronger oil also means that European gas suppliers may buy gas in the UK over the coming months as their oil hooked up prices rise in price. Gas for summer 2011 contracts rose 1.75 pence to 59 pence and April’s climbed to 58.90 pence. Meanwhile spot gas prices were traded at 59.75 pence on Monday, up 2 pence from Friday. On Tuesday prices continued to surge hitting 60 pence per therm. At the time of writing. Stronger gas prices means higher energy prices, baseload power for Tuesday was traded at 51 pounds per megawatt-hour. The biggest rise was seen on Winter 2011/12 contracts with increases of 2 pounds trading at 56.90 pounds per megawatt-hour. At the time of writing. Updated U.K. natural-gas and power contracts declined after two days of gains as crude fell and milder weather was forecast. Gas for summer, the six months from April, lost as much as 1.55 pence, or 2.6 percent, to 58 pence a therm, according to broker prices compiled by Bloomberg. It was at 58.4 pence as of 9:25 a.m. in London. The winter contract dropped as much as 1.05 pence to 67.75 pence. Gas for same-day delivery fell 0.9 pence to 58.9 pence. Power for next month dropped for the first time in nine days, losing 90 pence, or 1.8 percent, to 50.10 pounds a megawatt-hour. source: Bloomberg Businessweek Contact Us If you would like more information on our range of energy services or would simply like to find out how this could benefit your business, simply call our energy team today on 0870 710 7560 or request a call back at time to suit.
Or you might want to subscribe for further updates direct from our site. - 22 February 2011
Gas Prices Rise as Middle East Unrest Continues What started in Egypt seems to be spreading all over the Middle East. Popular revolt and political uncertainty is making investors plan for the unpredictable, as crude oil prices continues to rise, which in turn is contributing to higher gas and energy prices.
When the protests started in Egypt crude oil prices were below the $100 mark, more precisely at $98 a barrel. Last Monday the Brent crude oil barrel was traded at $108. As UK gas prices are tied up to oil prices, prompt and curve gas prices rose too. Prompt gas contracts for immediate and day-ahead delivery were both up nearly one penny from Monday’s close at 54.55 pence. While winter 2011 gas contract traded at 63.50 pence per therm, the highest level since October 2009. On Tuesday morning National Grid data showed that the system was undersupplied which associated with a slightly higher increase in demand was also responsible for higher wholesale gas prices. Since nearly 50% of UK power production uses gas as a fuel day-ahead energy prices also reported an increase of 0.75 pounds and were traded at 47.25 pounds per megawatt-hour. A drop in wind power generation also added to higher energy prices. If you would like more information on our range of energy services or would simply like to find out how this could benefit your business, simply call our energy team today on 0870 710 7560 or request a call back at time to suit.
Or you might want to subscribe for further updates direct from our site. - 22 December 2010
The Internet’s Energy Consumption and Its Carbon Footprint Over the past few years there has been an ongoing debate about the growing amount of energy needed to power the World Wide Web, a.k.a the Internet, and the impacts on our environment. Many have tried to pin down the exact amount of energy needed to power the internet and its carbon footprint. Recently The Guardian published an article saying that the Internet’s carbon footprint was around 300 million tonnes of CO2 per year, equivalent to every person in the UK flying to America and back twice over.
The article was published in August and with the number of internet users growing by the day worldwide I wouldn’t be surprised if these figures were higher nowadays. According to the UN by the end of the year there will be 2 billion world internet users, that is 1/6 of world population. Hypothetically, if these growth rates remain the same, the entire world would be online by 2020. To measure the Internet’s exact power consumption and then determine its carbon footprint we would need to know the precise number of computers, laptops and mobile phones that are online these days (which we don’t). Add that to the amount of energy consumed by all the Data Centres worldwide to then determine the internet power consumption and its carbon footprint. Scary isn’t it? But we gathered some data just to give you a better understanding of roughly how much energy is needed to power the World Wide Web these days. Back in 2006, data centres in America consumed a total of 61,000,000,000 kWh (yes you read it right 61 trillion kWh), which is enough to power the UK for 2 whole months. A single Google search produces 0.2g of CO2. Not that much right? But now, 3,100,000 Google searches emit enough CO2 to power an average house for a whole month. The monthly searches processed by Google produce 260 tons of CO2 which is equivalent to power an American fridge-freezer for 5,400 years. This consumes 3,900,000 kWh of energy, which is equal to washing 5.57 million loads of laundry. But wait, it gets worse! A single spam message produces the equivalent of 0.3 grams of CO2. Multiply that by 62 trillion pieces of spam circling the World Wide Web each year and we have the emissions equivalent of driving around the Earth 1.6 million times. Despite its huge energy consumption the internet is likely to play an important role as we move towards a low carbon economy. Thanks to advances in communication technologies an estimated 40% of the working population could work from home. If 40% of American workforce worked from home twice a week, carbon emission would be reduced by 53 million metric tons year, equivalent of taking 10 million cars on the road. If you would like more information on our range of energy broker services or would like to find out how this could benefit your business, simply call our energy team today on 0870 710 7560 or request a call back at time to suit.
Or you might want to subscribe for further updates direct from our site.
. . - 14 November 2010
Is Facebook Responsible For Higher Energy Bills? As a market leading energy broker we have noticed that the current generation is more committed to discovering and reducing its carbon footprint than ever before. But despite this growing awareness and our need to conserve and reduce our energy consumption, there is one thing that has changed our lifestyle, and increased our energy consumption like nothing else we have ever seen before. Facebook, the social networking site accounted for 1 in every 10 internet visits in September – up 4% from the same month last year, now overtaking popular search engines such as Google in the rankings.
Astonishingly Facebook now attracts 55% of all visits to social networking sites but others such as Twitter, Linkedin and Tumblr have seen visits at least double in the last 12-months, a recent report suggested. With all of this increased online activity comes an obvious need for an increased supply of electricity, both from the millions of online users, to the huge new data centers needed to host all of this data. With its membership now passing the 500-million mark back in July, the storage and transmitting of messages, pictures and other information through Facebook uses a vast and still rapidly increasing amount of energy, as the network continues to expand its worldwide operations. And with 4.5 billion updates posted to Facebook every week, the vast amount of energy needed for all of this online activity is enormous. One of the pricing fundamentals of any commodity is the supply and demand factor, and with any increased demand, we see an impact on the supply and eventually the cost. Because of Facebook’s rapid growth, their new hosting facility will need to be twice the size of its previous data centre, and to compound this issue the main source of electricity for the site is from coal fired power stations, the largest source of global warming pollution. But this problem isn’t just limited just to Facebook, as the demand for cloud based applications grows Google, Facebook, Yahoo and others are investing billions of dollars to build new data centers to meet their growing demand for Web services, adding to the world pollution from computing. In fact a recent study has estimated that the average user now spends at least 7-hours a month on Facebook alone, and reports suggest that this desire for social networking is set to increase further over the coming years. Given that energy is an expensive and rising cost, these service providers do have a financial and environmental motivation to use as little electricity as possible. But the implications for increased online activity is unlike anything that we have ever experienced before in our life times, and our desire and hunger for further social media interaction wont stop here. Facebook is set to launch its latest Google taunting product on Monday, the long anticipated Facebook email system. The launch of an @facebook.com email is not itself a great surprise, as the existence of a secret project officially known as Project Titan has been circulating since February. We just hope that our dwindling business energy supplies can cope long term with all of this increased use of energy. More Facebook Facts
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New Oil Tax Impacts Gas Prices:
