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The gas supply issue

Because it is cold the issue of gas supply has come to the fore again. In part that is because a free market works well when it is a buyers market, but with a sellers market weak market participants (aka people without a lot of money) tend to lose out.

Even if we don't have any more complex crisis this winter we are still likely to see an increase on gas bills.

The underlying problem is that the great variability of demand is linked to the weather.

National Grid, who are responsible for managing the gas supply, calculate a figure as to what the weather is like from the perspective of gas demand. They then fit that to a chart which indicates how cold they think things are. This is the chart at today's date:
2010 01 06 weather graph
You will note that in fact it is not as cold as a cold winter at the moment. They also measure the demand against predicted demand and here is another chart:
2010 01 06 demand graph
Note on this that although it is not as cold as a "cold winter" the demand is as high as one would get in a cold winter.

There is then the supply from Liguid Natural Gas, the fields on the UK continental shelf and via pipelines in from Norway, Holland and Belgium. The Belgian pipeline (the interconnector) can go both ways. We also export gas to Ireland.

On top of gas supplied on a day there is gas taken from storage. It is possible to make an estimate as to the maximum gas that can be supplied. That is called the Gas Balancing Alert Trigger level which is currently 461.2 million cubic metres (in a day).

We only have a couple of days of gas available in short range storage which can supply around 30 mcm of gas in a day. Hence we have a potential gas supply problem.

At the moment things are OK and it is not certain that there will be a problem. I have kept for some time a gas issues weblog which is the link above http://gasissues.blogspot.com/.

I have been nervous about the gas storage situation since 2005. It is like driving blindfold on a cliff. You might go over the edge, but also you might not. Actually this all depends upon the weather.

If this winter really is that cold then we face some real challenges. Some of the Combined Cycle Gas Turbine power stations can switch to oil. Otherwise coal is being used to a greater extent.

What you cannot do is to switch off the gas. That is because when it comes to switching it on again every building needs to be checked to avoid explosions. That takes a long time.

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