Report The future of energy – and of the EU gas market
Thursday 5 April 2012
Planning for freedom
History is full of radical experiments that were meant to change the world but ended up backfiring badly. Could such a fate be in store for the European gas market?
It should be noted that gas, for a variety of reasons, is expected to become increasingly important to the European energy mix (and the European economy), mainly at the expense of nuclear power and coal. Actually, this is a global phenomenon – it is no coincidence that the old “oil multinationals”, like Shell, BP and Total, are rapidly turning into “gas multinationals”.
At the same time, Europe will become more and more dependent on imports for its gas supply. That’s why it’s vital that Europe will have a market structure that will ensure a sufficient supply of gas at reasonable (cost-effective) prices.
According to EU and Member State leaders, this is not the case now. What we have now, they say, is an obsolete structure, dominated by a limited number of suppliers (and buyers) who control the market through long-term, oil-indexed contracts. This market structure, so the argument runs, prevents the EU from becoming integrated into the free global gas market that is being formed.
For this reason, the EU has embarked on a radical restructuring of the market. After working on this for many years, Europe is now on the point of finally breaking the hold that the big suppliers have on the market and instead putting in place what is hoped will be a number of interconnected regional wholesale markets, in which large numbers of buyers and sellers will carry on a thriving short-term gas trading business. The European market will, in fact, come to look much like the one in the US.
So will this ambitious project free Europe from its gas chains? Not everyone is convinced. Some observers worry that rather than freeing the market, the liberalisation drive will end up putting in place a new form of top-down control – this time by bureaucrats rather than market players.
EER’s chief editor Karel Beckman reports on the pros and cons of one of the most crucial economic developments taking place in Europe today. You can read his article by clicking here.
And we have more for you today. We are also publishing a fascinating interview with astrophysicist Tom Murphy from the University of California, made by our friends from the website Oilprice.Com. Murphy, who runs the popular blog “Do the Math”, and is a specialist in energy technologies, has a surprising view for a scientist: he doesn’t believe we should rely too much on science to solve our energy problems.
In fact, he has a lot more surprising views. He says he’d sooner have smart people than smart grids, is skeptical about “giant grids”, notes that “the scale of our fossil fuel use prohibits replacement by biofuels at a substantial level”, is fascinated with artificial photosynthesis, a fan of solar power (“I am drawn to solar. I don’t care if it’s two or three times the cost of fossil fuel energy – that’s still cheap”), not a great fan of shale gas, concerned about global warming but believes resource depletion is a bigger danger. “We deserve better”, he says, “than blind hope that someone somewhere will pull off a transformative energy miracle.” You can read the interview by clicking here.
Tom Murphy’s message seems an appropriate one to think about over the Easter weekend. We wish all our readers an inspiring Easter holiday and hope to see you back next week.
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