LNG prices lowest in years = Electricity tariff increase?

 

Phillip Ang

* The author blogs at LikeDatOsoCanMeh.

 

 

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12 Responses to “LNG prices lowest in years = Electricity tariff increase?”

  • UniQ:

    Its like the last Crude Oil price plunges. The fools hedge at the wrong price and got Sinkies to pay for the mistakes. Now no diff for LNG. Only fool Sinkies allow the other fools to fool them….

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  • Facing facts:

    The answer to your question is YES!
    In other countries, there could well be a huge protest.
    In Spore? Naaaah.
    Here, we’ll vote them in Again for More of the same.

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  • Bloody Chenghu:

    We must demand the Government to be answerable for such irresponsible price hike and fake reasoning.

    EMA must be held accountable. Those responsible in the government must be sacked.

    Thanks Philip Ang for all the research works. Please inform all Singaporeans and continue with the good works.

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  • A Nation Of Dumbos:

    Bohbian spineless dafts are there to be milked.
    They can only talk intelligently but not vote intelligently.

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  • Harder Truths:

    Look on the bright side – it’s 20% less than next year’s cost.

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  • oxygen:

    HERE IS WHY NATURAL GAS PRICE COLLAPSED and NOT expected to stage a price recovery anytime soon.

    Why Natural Gas Prices Collapsed

    https://oilprice.com/Energy/Natural-Gas/Why-Natural-Gas-Prices-Collapsed20700.html#

    NOW WHO SAYS ELECTRICITY PRICE IN LEE-jiapore has to go up BECAUSE OF RISING NATURAL GAS PRICES?

    POFMA EXEMPTED SUCH FAKE NEWS PUBLISHING?

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  • I'm halimah also Jiak Liao bee:

    Tin Can Kate Spade hubby is PAPIGS Crony running the EMA.
    I guess he has to prove himself how to fleece more money from the daft to improve his career path up the PAPIGS puppy chain.

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  • 70% dafts love INCREASE:

    Increase! 70% dafts love it. More PAP increase is good. The country is in the downturn economically since 8 yrs ago. Still many refuse to ADMIT. Once China in full force investments esp Malaysia, situation will become worst. Asset bubble will burst. It is a matter of time.

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  • TruBlu:

    GREED KNOWS NO BOUNDARY.
    GREEDY GAHmen will cro$$ the LINE.
    They dont care if commoners are sufferring as long ad they can COLLECT MORE MONEY TO $quander.

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  • Rabble-rouser:

    Miscalculation! Bad Investment! Lousy Market Timing! & Another State Initiated Economic Effort gone bad! All of which are true! But there is also another hidden reason.
    Many people don’t know that the Global Commodities Markets including oil can be manipulated by Futures traders as well as Financial firms in Wall Street.
    Link: https://newrepublic.com/article/114577/commodities-trading-hedge-funds-spook-wall-st-banks

    Since 2000s, there have been a series of monetary expansions by the US govt; Y2K & Electronic downturn in 2000, 9/11/2001 Event WTC collapse, etc. This lead to the first stage of Financialization (circa 2000-2008) – as the US-Fed created new money landed on the laps of Wall Street firms. The blurring of demarcation lines between Wall Street firms & Commodities trading lead to oil prices exponentially rising along with other commodity items.

    From 1999 to 2008, the price of crude oil saw an unprecedented spike, going from under $25 per barrel to more than $160 per barrel. Rapidly increasing demand in emerging economies such as China and India and production cuts by the Organization of Petroleum Exporting Countries (OPEC) in the Middle East drove the price of oil to its record heights.

    Shortly thereafter, a deep global recession throttled demand for energy and sent oil and gas prices into a precipitous free fall. By the end of 2008, the price of oil had bottomed out at $53. The economic recovery that began the following year sent the price of oil back over $100; it hovered between $100 and $125 until 2014, when it experienced another steep drop.

    But what should be interesting was that this 2nd phase of oil price rises were accompanied by 3 bouts of US Fed Quantitative Easing & the rise of US Oil & Gas Fracking Industry as well as the extraction of heavy oil sands in Canada which has the world’s third-largest crude oil reserve. Plus, the high oil prices post-2008 helped trigger much oil & gas upstream activities & production in high cost extraction places eg. Brazil offshore concessions (Keppel-Petrobras bribery case), Russia, offshore concessions in Malaysia, Indonesia, (the last 2 where SGX Offshore & Marine firms were active in), etc.

    China, whose rapid growth and expansion created an unquenchable thirst for oil in the first decade of the new millennium, began to slow after 2010. The 2011 Japan Tsunami & Nuclear disaster at Fukushima took out Nuclear energy as an energy resource. The high oil prices between 2010 until 2014 lead to global slower economic growth as global economies struggle with high energy prices & sluggish demand.

    - Cont’d -

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  • Rabble-rouser:

    - Cont’d -

    Yet oil prices remained stubbornly high! How can that be when global demand were actually declining, supply sources actually rising exponentially from US fracking & Canadian oil sands extraction?

    Extraction methods such as fracking, from oil sands are more expensive (high production costs) and therefore were not profitable if oil prices fall too low. The US financial firms (Wall Street firms, Commodities future traders & US hedge funds) all help contrive in manipulating the price of oil to benefit the emerging US fracking industry as well as the Canadian oil sands industry. The reason: To attract investments & debt offerings (junk bonds) into the US fracking industry under the impression of a sustainable high oil price. Of course, Wall Street firms earned high fees for various financing jobs for the fracking industry between 2010 to 2014.

    Price setting under the oil futures market were intended to be price discovery process but they could be manipulated. The transaction value for oil futures in the commodities market far exceeds the actual physical deliveries of oil (no relationship to actual demand except for spot price setting). Bear in mind that futures contracts are highly leveraged contracts with only a small percent deposit required to purchase a full value futures contract. In addition, futures contracts can be easily rollover onto the next period of delivery without incurring substantial expense except for financing cost. In a zero interest environment, there’s literally no financing cost to the rollover mechanism for oil futures contracts & the future delivery price which can be kept high.

    Saudi Arabia faced the prospect of losing market share to the increasing production from the two North American countries with their more costly production methods faced an imminent threat. Saudi Arabia’s decision to increase production, deciding that low oil prices offered more of a long-term benefit than giving up market share contributed substantially to falling 2014 oil prices. Because Saudi Arabia produces oil so cheaply and holds the largest oil reserves in the world, it can withstand low oil prices for a long time without any threat to its economy. Continual low oil prices will be forced upon the US Fracking Industry to abandon their more costly production methods due to lack of profitability & kill off the threat.

    - Cont’d -

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  • Rabble-rouser:

    - Cont’d -

    S’pore govt had expanded into the LNG market with their onstream LNG processing plant in 2013. They had to coerce both new entrants & existing Co Gen ventures to invest & expand S’pore electricity generating capacity by leaps & bounds in order to offtake the new LNG plant’s throughput. But Saudi Arabia’s actions in 2014 threw a spanner into the works.

    All the LNG plant & the Co Gen ventures can’t make money because (1) S’pore’s economy at the moment can’t absorb the huge capacity increases; (2) the low gas prices are a sign of overcapacity in the Natural Gas market which came onstream just when Saudi Arabia increased it’s production to force oil prices down; (3) high capitalisation of their “investments” all of which were very badly timed & not well researched (hubris & bureaucratic tunnel vision) coming to roost. Hyflux demise was exactly from these 3 factors – especially their high capitalisation costs building TuasSpring facility.
    Truth is that behind the veil, these “profits” goes to pay off the huge investments made in LNG & the increased electricity capacity of the various Co Gen entities. Of course, S’pore households pay the price for their investment bungles. And it reveals that S’pore is still being configured for high population growth going forward.
    But what is disturbing is that S’pore State-directed Investments & their heavy handed approach were clearly failing. A better alternative would be for govt to hand off & for private sector initiatives to take the lead. But LKY’s control mechanism were too entrenched & the PAP too stubborn to admit their failures!

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