In Britain natural gas prices have spiked over 400% in the past year and 75% in the past month. In 2012, 25% of Britain's electricity was provided by coal plants. Today coal plants have been shut down completely. Nuclear power has steadily decreased and Scotland not long ago decided to stop all fossil fuel development from the North Sea.

 

If you're looking for a lab test on people's commitment to the environment, Britain may be a Petri dish that scientists want to look at. Ten UK utility companies have collapsed since the August price surge in natural gas [the UK government sets the price that the electricity companies can sell at. At the current price they are not profitable]. Electricity prices have spiked and consumers are being turned away at fuel stations because of a lack of supply. There are many reasons that Britain is in the current situation (Graph above may explain some of the reasons) but I doubt any of the consumers there care why they're in the situation but I can only assume they are concerned about their costs and their abilities to keep their houses warm this winter.

 

To be fair, Britain is not the only one dealing with an energy crisis. China this week warned that food security could be affected because sky-high coal prices which affect fertilizer supply. The country's top official has ordered energy companies to secure supplies for this winter “at all costs” and the government has limited electricity use to more than half of the provinces in their country.

 

This could make for very interesting energy market over the next 6 to 18 months. Oh! did I mention that the NYMEX Nov. 21 natural gas contract has gone from $2.52 on January 1, 2021 to $5.75 today!

 

I've also included a piece from our CIBC economics team entitled "Testing, testing, one, two, three" 

 

As always if you have any questions please feel free to give us a call anytime.

 

Have a great weekend.

 

Milan