The price of oil is virtually in freefall – and Muscat is going for double gas
Published:
October 16, 2014 at 2:09am
While Muscat and Mizzi pursue their plans for two gas-fired power stations, purportedly for the sake of cheaper electricity, the price of oil is tumbling.
21 Comments Comment
Leave a Comment
http://www.cnbc.com/id/102087319
As I recall, one of the conditions agreed to by Electrogas is that the unit price of electricity supplied would never exceed the unit price that would have been charged using an oil-fired power station.
With price of gas shooting up and oil prices steadily dropping, that clause in the station contract is already guaranteeing major losses for the gas-fired power station.
Muscat bound Enemalta to buy up all electricity generated by Electrogas, before turning to other sources, while power demand is not increasing at the rate originally projected.
The China -owned BWSC power station stands to have no market demand for any electricity it generates. No wonder China has the jitters.
The Chinese are not philanthropists; when they invest, they expect a return, whether financial or political.
With his commitment to reduce electricity tariffs to business, while at the same time selling off Enemalta’s sole profit generating Petroleum Division to himself to bolster government revenue, Muscat has painted himself into a corner.
Muscat is deeply in the woods on this one. Snag is he has dragged all of us in there with him.
During these last 4 months, international oil prices plummeted by more than 20%, and they are still falling.
Meanwhile, the price of LNG went up by about 8%, and is still rising.
Malta also needs to add the huge problems of transporting, storing, and handling of bulk LNG.
Then, to boot, we have a dishonest prime minister, making the decisions.
This is bad news indeed for all of us. This new gas power station dumped on us by Joseph Muscat is looking very much like the Marsa Shipbuilding dumped on us by Mintoff, only so much more costly in every way.
Even Muscat’s and Mizzi’s credibility is on the decline,only Sai Mizzi’s bank account is on the rise.
Another in the long list of blunders by the Muscat government.
This is not a blunder.
This is a national disaster of the first magnitude.
This is sheer madness.
I looked up what prices we where being charged for fuels back in 2010 when the international price of oil was in the same level and I found out that today we are paying 25c per litre more for petrol and 28c per litre more for diesel.
Source: Enemalta
For October 2010 prices:
http://www.enemalta.com.mt/newsDetails.aspx?id=17871
For May 2014 – December 2014 prices:
http://www.enemalta.com.mt/newsDetails.aspx?id=18120
Why was Konrad Mizzi on Super One yesterday evening?
When everybody is waiting for information about the new power station, the first thing that Mizzi does as soon as he is back from China is to go on the PL television.
Why didn’t he go on TVM or give a press conference?
It should be going down to 80 dollars a barrel soon.
I was playing with my 6 hats yesterday, and I think I have found a solution for Joseph Muscat.
Step 1: Define the problem
We have a situation where:
1. China has a powerstation here in Malta (BWSC), but they do not have a contract with the government/Enemalta to sell them electricity.
2. Electrogas has a contract to sell electricity to the government (that is what we were told, but I do not believe it), but they do not have a powerstation.
Can’t you all see the solution?
Step 2: Solution to the problem
Electrogas will now enter into an agreement with China to buy electricity from their BWSC plant, without having to build a new gas powerstation. All that is needed is for China to convert BWSC plant to gas.
Easy, ha?
It’s as sunny as ever, so I’m still wearing my straw boater, so I should be thinking positively. However, it has my Heidelberg Studenenverbintung ribbon, so I also think analytically, ach ja.
Your solution would cut everyone’s profits by at least one half. China would have to go through the extra expense of converting their power station, plus the extra expense of using gas, when oil is getting cheaper.
Electrogas would be reduced to a mere middleman, and would be at the mercy of the prices set by their supplier (China), and also at the mercy of the Maltese government who would set prices at the consumer end (ghax ahna weghdna li nrahhsu d-dawl, wouldn’t you know).
So, full marks for effort and ingenuity, Ciccio, and for your lovely hats. But nein. Not six. Nein.
Nein out ten, perhaps?
Never underestimate the generosity of the Maltese taxpayer, Baxxter. The Labour government never does.
Robin Hood would have been out of work in Maltese Nottingham.
And the price of diesel remains high. Whatever happened to the price adjustments practised by the previous government?
This country is sadly run by a handful of amateurs operating completely out of their depth.
Yes, very true, that is what is meant by “price stability” Labour style. Keep it high.
France, Germany, Austria, UK – Euro heavyweights – all places where petrol is cheaper than in Malta.
No need for new taxes to compensate for the drop in electricity rates, the old ones keep on getting better by the day.
Amateurs?
Thieves.
‘Double gas’, perfect definition.
If I may, the thing flared up the moment Konrad Mizzi uncovered some of the details, betraying a total lack of technical knowledge.
The energy guru couldn’t even bring himself to admit that gas, unlike liquid fuel does not follow a simple volumetric logic.
It’s compounded by cryogenic technology and regasifiers, capital and running costs requiring quantity turnover this smallish town cannot ever need.
And that was Mizzi’s particular field, or at least that’s where we were told his expertise lies; working commercial models to match the industry.
Plainly he didn’t, and if he did, he failed.
This blog had all sorts of videos and images showing supertankers, koppli tal-Mosta, exclusion radii stretching three kilometers; everything pointing to mismatched demand requirements to provision capabilities, the former minute.
Not that those with a minimum of technical knowledge and common sense wouldn’t expect. It’s not as if the PN in its two decades didn’t attempt the same. Just don’t give us cheap rhetoric about how they didn’t really try then.
Introduce an interconnector which can, and that’s why they never admit its existence, take up the same design criteria, and this whole exercise is nothing but pure gratuitious polemic. And how callous is that, resorting to lies and the total alienation of fact from the argument simply to score points.
The PN is not calling for his resignation, Pullicino stood well away from entering that snide contest on Norman Vella’s show on Net. Good.
But boy, do they need to assume responsibility for this illogical and perverse behaviour. It’s our future that’s at stake here, and they’ve demonstrated they couldn’t give a toss.
So Kurt this morning will insist Busuttil’s defending HFO to this day. I suppose panic determines even more smokescreens
Just remember everyone when Tonio Fenech called a press conference with a slide showing a little table comparing the interconnector’s resulting cost per unit being considerably lower than Muscat’s phantasmagoric plan.
And that was compiled by Labour’s own technical consultants.
Sublime or what.
You forgot to mention that due the 2c agreement, our petrol and diesel prices cannot adjust either.
Italians have just the term for Muscat and co.; BRA – braccia rubate all’agricoltura, or better, misplaced peasants.
Is the price of oil now cheaper than that of gas?
Following Muscat’s great con played on the Maltese people I am not hiding my Schadenfreude. He deserves what he’s getting.
Muscat is under the hands of a handful of Gujarati businessmen who are actually controlling the economy of the nation.
So if they are making profit then it is well and good. Otherwise they will just change the things in their favour.
So be it – power generation or anything else they will manipulate it to favour them.