Energy is an essential service for households, but the case is less compelling to intervene on gas prices for manufacturers without unintended consequences.
Usually, when energy prices are high, energy producers dig deeper for more coal and extract more gas.Hence, the famous adage: “The best cure for high prices, is high prices”.
Despite the significant increase in renewable investment, green energy is not yet being produced at the pace or reliability required to replace the decommissioning of coal-fired power and depreciation of existing energy assets.has acknowledged as much“It is difficult to make predictions here, but it’s probable that the global capital stock that is used to produce energy will come under recurring pressure in the years ahead,” Lowe said last week.
Ongoing government interventions will add to uncertainty and deter investment by gas producers – both in existing and potential new gas fields.That could ultimately lead to higher prices in the long term.Interventions will also reduce the incentive for industrial gas users to lock in long-term supply contracts, hedge via swap contracts and purchase excess gas to place in storage.
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