[h=2]Sunday, April 01, 2012[/h][h=3]Electricity prices go up because of natural gas prices - really?[/h]
Firstly, I am going to plead total ignorance on the relationship between oil and natural gas prices.
In a strange moment of synchronisity, whilst surfing the net at Hong Kong airport, I came across two articles. One article in TODAY headlined: "Electricity to cost more from tomorrow.". The justification for the increase was reported as follows:
The second article I read is from CANADIAN BUSINESS pertaining to oil prices. But in that article the following is stated:
http://www.canadianbusiness.com/art...e-in-u-s-supply-potential-release-of-reserves
And then I did a quick google search and found this article:
http://www.businessweek.com/ap/2012-03/D9TQBG480.htm
"Natural gas price drops to 10 year low" in the Business Times.
So, my question is: Has the natural gas price gone up thereby justifying the increase in electricity costs?
This area is not my forte and I could be made to look really stupid. But, I figured that this is an issue of great importance to us citizens and we need to know why there is an increase in the tariff and if the claims made by the relevant parties are justified. So, I am going out on a limb.
Posted by Subra at <A class=timestamp-link title="permanent link" href="http://article14.blogspot.com/2012/04/electricity-prices-go-up-because-of.html" rel=bookmark target=_blank><ABBR class=published title=2012-04-01T04:35:00-07:00>4:35 AM</ABBR>
Labels: Electricity, SP services
[h=4]4 comments:[/h]<DL id=comments-block class=avatar-comment-indent><DT id=c6382604274583276630 class=comment-author>
Anonymous said... <DD id=Blog1_cmt-6382604274583276630 class=comment-body>WP should definitely find out.
<DD class=comment-footer>7:09 PM
<DT id=c5576100552367121308 class=comment-author>
Anonymous said... <DD id=Blog1_cmt-5576100552367121308 class=comment-body>When oil prices went up, the PTC approved fare increases. When the oil price came down and some commuters were asking for fares to be adjusted downwards, some clown in white stated that public transport fares were not pegged to oil price.
I think electricity tariffs may be the same. Natural gas be be at 10 year low but if oil goes up, electricity price goes up and when natural gas price goes up while oil come down, the tariffs will still go up. Classic - heads I win, tails you lose. I am poor and I hope they do not try to help me raising GST higher. I also do not need better healthcare at ever increasing costs.
<DD class=comment-footer>3:14 AM
<DT id=c5663383856528284960 class=comment-author>
Anonymous said... <DD id=Blog1_cmt-5663383856528284960 class=comment-body>The reason is because, the natural gas that our gencos use for generating power is pegged to the price of oil. The more important question is to ask who is the genius who negotiated such a contract.
<DD class=comment-footer>5:40 AM
<DT id=c8117002064954992138 class="comment-author blog-author">
Subra said... <DD id=Blog1_cmt-8117002064954992138 class=comment-body>It appears that Singapore's natural gas price is contractually pegged to oil and this is the practice in many asian countries.
Got this from the Energy Market Authority's website:
"Why are electricity tariffs pegged to oil prices when Singapore uses mainly natural gas to generate electricity?
While Singapore's electricity is mainly generated from imported natural gas, the prices of natural gas (which are determined by commercial contracts) are indexed to fuel oil prices. This is the market practice in Asia for natural gas contracts. Hence, if the prices of fuel oil increase by 10%, natural gas prices would also increase by 10%. This is why the fuel cost component of our electricity tariff is affected by movements in fuel oil prices
</DD></DL>
Firstly, I am going to plead total ignorance on the relationship between oil and natural gas prices.
In a strange moment of synchronisity, whilst surfing the net at Hong Kong airport, I came across two articles. One article in TODAY headlined: "Electricity to cost more from tomorrow.". The justification for the increase was reported as follows:
The average fuel oil price over the last three months - between Jan 1 to March 15 - increased by 7.3 per cent from S$127.07 to S$136.37 per barrel. "This increase in fuel oil prices saw a corresponding increase in the price of natural gas which is used for power generation in Singapore," said SP Services.
The second article I read is from CANADIAN BUSINESS pertaining to oil prices. But in that article the following is stated:
Natural gas prices fell to a 10-year low amid a glut of U.S. supplies.
http://www.canadianbusiness.com/art...e-in-u-s-supply-potential-release-of-reserves
And then I did a quick google search and found this article:
http://www.businessweek.com/ap/2012-03/D9TQBG480.htm
"Natural gas price drops to 10 year low" in the Business Times.
So, my question is: Has the natural gas price gone up thereby justifying the increase in electricity costs?
This area is not my forte and I could be made to look really stupid. But, I figured that this is an issue of great importance to us citizens and we need to know why there is an increase in the tariff and if the claims made by the relevant parties are justified. So, I am going out on a limb.
Posted by Subra at <A class=timestamp-link title="permanent link" href="http://article14.blogspot.com/2012/04/electricity-prices-go-up-because-of.html" rel=bookmark target=_blank><ABBR class=published title=2012-04-01T04:35:00-07:00>4:35 AM</ABBR>
Labels: Electricity, SP services
[h=4]4 comments:[/h]<DL id=comments-block class=avatar-comment-indent><DT id=c6382604274583276630 class=comment-author>
Anonymous said... <DD id=Blog1_cmt-6382604274583276630 class=comment-body>WP should definitely find out.
<DD class=comment-footer>7:09 PM
<DT id=c5576100552367121308 class=comment-author>
Anonymous said... <DD id=Blog1_cmt-5576100552367121308 class=comment-body>When oil prices went up, the PTC approved fare increases. When the oil price came down and some commuters were asking for fares to be adjusted downwards, some clown in white stated that public transport fares were not pegged to oil price.
I think electricity tariffs may be the same. Natural gas be be at 10 year low but if oil goes up, electricity price goes up and when natural gas price goes up while oil come down, the tariffs will still go up. Classic - heads I win, tails you lose. I am poor and I hope they do not try to help me raising GST higher. I also do not need better healthcare at ever increasing costs.
<DD class=comment-footer>3:14 AM
<DT id=c5663383856528284960 class=comment-author>
Anonymous said... <DD id=Blog1_cmt-5663383856528284960 class=comment-body>The reason is because, the natural gas that our gencos use for generating power is pegged to the price of oil. The more important question is to ask who is the genius who negotiated such a contract.
<DD class=comment-footer>5:40 AM
<DT id=c8117002064954992138 class="comment-author blog-author">
Subra said... <DD id=Blog1_cmt-8117002064954992138 class=comment-body>It appears that Singapore's natural gas price is contractually pegged to oil and this is the practice in many asian countries.
Got this from the Energy Market Authority's website:
"Why are electricity tariffs pegged to oil prices when Singapore uses mainly natural gas to generate electricity?
While Singapore's electricity is mainly generated from imported natural gas, the prices of natural gas (which are determined by commercial contracts) are indexed to fuel oil prices. This is the market practice in Asia for natural gas contracts. Hence, if the prices of fuel oil increase by 10%, natural gas prices would also increase by 10%. This is why the fuel cost component of our electricity tariff is affected by movements in fuel oil prices
</DD></DL>
