Letter: Why Norway won’t cut petrol prices in the event of a supply shortage & more

In his Markets Insight column (August 19), David Sheppard suggests that Norway lower the price at which it sells its gas. But as Sheppard himself acknowledges, Norway is already stepping up gas extraction, at the cost of lost oil production, thus making a modest effort to help Europe through the crisis.

There are, however, arguments against his proposal to Norway to lower prices. The Norwegian price cuts would do little to help end users, but rather benefit intermediaries such as companies that buy and resell the gas. Although Norway is a big seller in the North West European gas market, its market power is limited. The lack of vertical integration means that parts of the value chain are separate and free to set prices independently.

As a remedy, Sheppard could consider downstream price controls, but the basis for this would be arbitrary.

The German government recently committed 15 billion euros to replenish gas stocks before winter. The aim is to show its audience that the government in Berlin is serious about security of supply and that Russia is not indispensable.

A special gas purchase commission will have the necessary resources to conclude delivery contracts, also from distant sources.

The transaction is likely to lead to even higher natural gas prices in Europe. Presumably, German electricity and gas companies favor higher gas prices in order to replace Russian molecules with foreign molecules, which implies higher transport costs. Companies also need higher prices to finance the expansion of solar and wind energy. The prevailing market structures and practices in Germany facilitate to some extent the transmission of these high costs to consumers. But it’s far from a perfect solution, and balancing the market is difficult.

The deeper problem is the contradiction between the willingness to pay extremely high prices and the unwillingness to contract long-term supplies at more moderate prices (ie with Qatar and other suppliers).

I fear the result will be a lasting supply crisis with high prices. In this situation, why should Norway or any other seller offer lower gas prices?

Øystein Noreng
Emeritus Professor, BI Norwegian
Business School, Oslo, Norway

Letter: why Norway won’t cut petrol prices in the event of a supply shortage and latest news

I tried to give all kinds of news to y’all latest news today 2022 through this site and you will like all this news very much because all the news that we always give in this news is always there. It’s on a trending topic and regardless of the latest news

it was always our effort to reach you that you continue to get the Electricity News, Degree News, Donation News, Bitcoin News, Trade News, Real Estate News, Gaming News, Trending News, Digital Marketing, Telecom News, Beauty News, Banking News, Travel News, Health New, Cryptocurrency News, Claims News the latest news and you always keep getting the news information for free through us and also tell people. Give that any information related to other types of news will be

Letter: Why Norway won’t cut petrol prices in the event of a supply shortage and more live information

All this news i made and shared for you, you will like it very much and we keep bringing you topics like every time so you keep getting hot news like trending topics and you It’s our goal to be able to have

all kinds of news without going through us so that we can reach you the latest and best news for free so that you can go further by getting the information of this news with you. Later we will continue

to provide information on more world news update today types of latest news through posts on our website so that you always keep moving forward in this news and whatever type of information will be there, it will definitely be passed on to you.

Letter: Why Norway won’t cut petrol prices in the event of a supply shortage and more news today

All this news that I have brought to you or will be the most different and best news that you will not get anywhere, as well as the information Trending News, Latest News, Health News, Science News, Sports News, Entertainment News, Technology News, Business News, World News of this made available to you all so that you are always connected with the news, stay ahead of the game and continue to today’s news all types of news for free till today so you can get the news by getting it. Always take two steps forward

Credit goes to news website – This news website from the original content owner. This is not my content so if you want to read the original content you can follow the links below

Get original links here🡽


Source link

Comments are closed.