Winter 2008 Gas Price Increase On Wholesale Market
As thoughts in the gas market now turn to the winter period and the expected increase in demand we saw a major surge in prices yesterday before they fell off their peak. Traders are now in a panic as a major Norwegian gas pipeline is currently closed and may remain so for the duration of the winter period. In the energy market at the moment it is just bad news after bad news!
However, on further investigation it seems as though many traders had actual 'shorted' gas contracts on the market (i.e. sold supplies they did not have with the idea of buying them back lower down) in the hope that prices would fall. The Norwegian fiasco seems to have led many to panic and close their short positions hence pushing the price sharply higher in early trading.
While there is very little that the authorities can do, it is infuriating to see the price influenced so heavily by traders who have no intention of taking delivery of the gas supplies in question. However, this is one of the downsides of a free investment market with many participants not interested in the longer term picture and happy to take short term gains as and when available. This then impacts upon the gas supply companies and the poor consumer is left to pay the price.
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