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Comment by sorokod | Hacker News Reader

>you want to be able to smooth out fluctuations in supply and demand.

Can you say a bit more about the "you" mentioned?

I can imagine "you"s who care only about having heating during wintertime.

The standard "smooth out the fluctuations" approach gives an extremely low probability of running out of fuel during the winter at a reasonable cost, but only assuming sufficient fuel imports. Because of the loss of Russian gas and not having sufficient LNG infrastructure to make up it, Europe will burn gas faster than replacement when it's sufficiently cold, and if the cold weather lasts long enough they could run out of gas. So they're now using a more expensive and wasteful strategy of keeping storage closer to full, exactly to reduce the risk of people not having heating during winter.

Given the disrupted gas supply, what alternatives are there to the "expensive and wasteful strategy" ?

I do think expensive and wasteful is the right choice here.

Just because you’ve got no other option’s doesn’t mean a strategy isn’t “expensive and wasteful”. It just means you’re desperate, so you’ll happily eat the cost.

But long term I would expect Europe to use a much less expensive and wasteful strategy. But obviously it takes time to build and deploy alternatives.

The strategy in question is, more generally, moving volatility in the shoulders of the distribution to the central region. It knowingly subjects us to worse-than-normal price movements in the stable regime so that price movements aren't as crazy when we go out to more extreme regimes.

The alternative would be to, well, not do that. Or any other of a number of volatility-controlling strategies. I don't think any of them are better, but there's always an alternative.

From context, it seems that the "you" in question is "a company that runs a natural gas storage space." As a company with fiduciary responsibilities, they likely can't concern themselves too much with the problem you mention.

European utilities are often public utilities that are nationalized in some way, not strictly corporate businesses.

For good. Remember Texas electricity costs soaring?

Not sure what you're talking about, practically every major EU energy org is a corporation (traded on an exchange or even an Ltd-like private company), only sometimes there's a bit of it owned by a state... Can you give some examples of major energy organizations that are wholly-owned by a state (or at least majority-owned) or actual organizational units of a state?

Vattenfall.

https://en.wikipedia.org/wiki/Vattenfall

Fortum, 50.x% owned by the finish state.

https://en.wikipedia.org/wiki/Fortum

Equinor, 67% Norwegian government.

https://en.wikipedia.org/wiki/Equinor

Ørsted, 50.x%. Danish state.

https://en.wikipedia.org/wiki/%C3%98rsted_(company)

EDF, 87% French state.

https://en.wikipedia.org/wiki/%C3%89lectricit%C3%A9_de_Franc...

Good examples. But what about the rest of the continent? And while these companies are the largest on their home markets, they're not the only ones there, are they? And they operate on foreign markets where they are a corporation like any other. For this we should consider only the home-based operation where they can have influence on the state policy, IMHO.

And what about EU rules against unfair competition? They basically force these companies to behave like any other market participant and forbid the state from giving them much/any help. This had real consequences in Poland and Czechia where the states wanted to help nuclear projects (in case of Czechia it was CEZ - the partially state-owned energy company) but the EU stopped it.

This is a good question, I don't understand the downvotes or the responses (1 exception). Gas is delivered to customers via a whole system of players, each who have different motivations and incentives. How you arrive at the current state of "more gas in storage than otherwise" is, at least on the surface, an interesting question when one considers that complexity.

One of the important factors in ensuring heating is keeping the movement of gas from being too unpredictable. One of the important factors in keeping it affordable is having a stable supply.

Stable supply is not what we are looking at here.

Storage is a factor in supply. The storage is having trouble, so this costs more money, which means it's going to be harder to afford heating even if the gas doesn't run out. That's why smoothing out fluctuations is relevant to people that "only care about having heating".

What do you mean by "storage is having trouble"? Are you thinking of an alternative?

The price going wonky is the trouble at hand.

I am not thinking of an alternative unless "having more storage" counts.

They mean they don't have the capacity to offload all the waiting tankers due to the on-shore storage tanks being mostly full. The ships sitting idle costs money. In an effort to stop the bleeding from the idle tankers, they drive the costs of the fuel down in an attempt to lower the supply in the on-shore tanks so they can offload the waiting tankers.

In a normal scenario they would have enough slack in the on-shore storage to absorb the ebbs and flows of incoming tankers and outgoing usage without resorting to idle tankers in the ocean.

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