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i double checked before posting, and what you're saying doesn't reflect what i've read regarding electricity market. FWIU, once the gaz station are active ( be

by bsaul 4y ago

i double checked before posting, and what you're saying doesn't reflect what i've read regarding electricity market. FWIU, once the gaz station are active ( because of a surge in demand) the price is set to theirs for the whole electricity produced, not just the one they produce. This threshold effect is very peculiar and is very different from other markets (i assume oil extraction cost are lot different depending on where they take place, but for electricity in our current situation the cost difference are so wide that it sure makes the whole system look a bit absurd)

rr808 4y ago
No this is the same in every commodity market. Say a bag of apples is normally a pound. If lots of orchards get destroyed and the price goes up to £3 because lots of people have to buy apples, the price at all markets will be the higher price. But incremental supplier is important by increasing supply at the higher price. Eg if it costs £1 to ship a bag of apples from Italy (and it costs £1 there), then the new price will be more like £2 as a new supplier can bring more apples. Right now there are new incremental suppliers waiting to deliver electricity so demand destruction is the only thing to stop the price going to infinity.
- bsaul 4y ago
  well, i don't know where you live, but apples prices are widely different in supermarket depending on where they come from... And the difference comes in great part from the cost it took to produce them (labor, regulations, transportation, etc).
  - hcurtiss 4y ago
    Try a commodity like wheat or lumber instead. Those who produce it more cheaply make more money. That’s how markets work.
    - bsaul 4y ago
      I think there must be some kind of maximum gap between the cheapest and the most expensive price in order for the market to work. Especially in something as essential as energy. The decision to combine all kinds of electricity under a single market is arbitrary. it was of course made for convenience for the consumer, i suppose. I'm clearly not an expert, so i can't pinpoint exactly what makes the current situation weird. Maybe it's the fact that energy production is a strategical matter often determined at a country level, and so having all the benefit of the "best" strategy lost to the customer, simply because other countries didn't make the correct choice, seem a bit wrong. Or maybe it's the fact that we chose to not make a distinction between local price and foreign price ? ie: have a local price for when the electricity produced is consumed in the same country ?

by bsaul 4y ago

rr808 4y ago

No this is the same in every commodity market. Say a bag of apples is normally a pound. If lots of orchards get destroyed and the price goes up to £3 because lots of people have to buy apples, the price at all markets will be the higher price. But incremental supplier is important by increasing supply at the higher price. Eg if it costs £1 to ship a bag of apples from Italy (and it costs £1 there), then the new price will be more like £2 as a new supplier can bring more apples. Right now there are new incremental suppliers waiting to deliver electricity so demand destruction is the only thing to stop the price going to infinity.

bsaul 4y ago
well, i don't know where you live, but apples prices are widely different in supermarket depending on where they come from... And the difference comes in great part from the cost it took to produce them (labor, regulations, transportation, etc).
- hcurtiss 4y ago
  Try a commodity like wheat or lumber instead. Those who produce it more cheaply make more money. That’s how markets work.
  - bsaul 4y ago
    I think there must be some kind of maximum gap between the cheapest and the most expensive price in order for the market to work. Especially in something as essential as energy. The decision to combine all kinds of electricity under a single market is arbitrary. it was of course made for convenience for the consumer, i suppose. I'm clearly not an expert, so i can't pinpoint exactly what makes the current situation weird. Maybe it's the fact that energy production is a strategical matter often determined at a country level, and so having all the benefit of the "best" strategy lost to the customer, simply because other countries didn't make the correct choice, seem a bit wrong. Or maybe it's the fact that we chose to not make a distinction between local price and foreign price ? ie: have a local price for when the electricity produced is consumed in the same country ?