Long stories short
- Iranian state media said three protesters were killed when police fired live rounds at a demonstration in Mahabad.
- New elections were set to be called for Northern Ireland after a deadline passed for devolved government to be restored.
- Researchers from King’s College London said seeing or hearing birds can improve mental wellbeing for up to eight hours.
- Mexico’s Senate approved a bill to scrap daylight saving time, meaning Sunday will be the last time the country turns the clocks back.
Gas prices that were surging because of the war in Ukraine are now swooning despite it. In principle this should
- take the sting out of inflation;
- lower borrowing costs for governments and energy bills for consumers; and
- help struggling economies like the UK’s with their public finances.
In practice delays of several months are likely before any of these things happen, and they require multiple pieces on the global gas chessboard to cooperate. This winter could be less grim than forecast but it still looks tough.
By the numbers
67 – percentage fall in the cost of Dutch benchmark gas since August
70 – percentage fall in the average cost of gas futures since August
93 – European gas storage levels, in per cent of total capacity, up from 77 this time last year
minus 16 – price in euros of a megawatt-hour’s worth of gas, for an hour last Monday
50 – approx. number of LNG tankers queuing up off European ports waiting to unload
Helping. Several factors are driving wholesale gas prices down even though less than a quarter of the gas Russia usually supplies to Europe is getting through:
LNG. Some of the Russian shortfall has been made up with piped gas from Norway and Algeria but Europe’s single biggest energy lifeboat consists of liquefied natural gas shipped from Qatar, much of it being unloaded at four new floating terminals moored off Germany’s Baltic coast. LNG has to be ‘regasified’ (allowed to warm up) before being fed into the grid. Europe’s regasification capacity is still playing catch up with the current LNG oversupply. Hence Monday’s brief negative price spike.
EU. The union has agreed a package of measures designed to cut overall gas consumption by 15 per cent this winter. German industrial consumption is already down nearly a quarter year-on-year.
Warmth. Average temperatures in much of China as well as Europe are up to ten degrees above normal for the time of year. “It’s called weather,” Julia Hartley-Brewer told the BBC’s Question Time last night, accurately in a narrow sense but blind to the bigger picture of steadily warmer, shorter winters. The long-term forecast is for a mild one, and the difference between a cold and a mild winter in terms of EU gas demand is around 25 billion cubic metres or 7-8 per cent.
Wind. It’s been a relatively windy October, boosting renewables’ share of the European energy mix and cutting demand for gas-fired power.
Prices. Warnings of spiking prices influenced consumers as well as businesses. People have lowered thermostats and worn more fleeces when necessary. “The price signal has done its job,” Chris Giles writes in the FT. “It has forced Europe to adapt.”
Hindrances. Even when wholesale gas prices are falling there are two main obstacles to quick relief for households and businesses:
Futures. The prices consumers pay on a given day are determined by forward contracts typically signed six months earlier rather than spot prices – and six months ago the markets were in panic mode as traders scrambled for limited LNG supplies.
R.O.W. Europe has done what it can to secure supplies, but the rest of the world will ensure they’re tight for months to come. According to oilprice.com
- Russia intends to halt its remaining gas supplies to Europe in response to EU plans for a gas price cap;
- Qatar says it is “absolutely committed to [the] sanctity of contracts” and won’t divert LNG shipments bound for Asia to Europe even if the weather gets colder; and
- China has barred importers from re-selling LNG shipments to Europe as it seeks to build up its own reserves.
The downside: it could take a year for lower gas prices to feed through into lower inflation. The upside: eight months ago Europe didn’t know if it could survive a winter without Russian gas. Now it knows it can.
CAPITAL ECONOMY, BUSINESS AND FINANCE
Secrets of Red Bull
Red Bull charges ten times as much for a can of its signature high-caffeine drink as it costs to make. The company sold 10 billion cans last year and earned enough to spend €1.6 billion on marketing. That’s how it gets to fund an F1 team, athletes in every other extreme sport imaginable and Felix Baumgartner’s parachute jump from space. If you have more questions about Red Bull, they’re probably answered in Chris Bryant’s Bloomberg column, pegged to the untimely death last week of the brand’s founder, Dietrich Mateschitz, at 78. Another remarkable indicator of a high-functioning business model: on average, each of the company’s 13,600 employees generates half a million euros of revenue a year. Not that there’s no room for improvement. Employees of Monster, Red Bull’s biggest rival in the US, each generate three times as much.
TECHNOLOGY AI, SCIENCE AND NEW THINGS
Musk sinks in
The world’s richest man has completed his $44 billion purchase of Twitter and immediately marched its CEO, CFO and legal affairs chief off the company’s San Francisco premises, Reuters reports. The contrast between Elon Musk’s ruthless clearout of top management and his soft-soaping of advertisers in an open letter hours before is striking. He wrote that “fundamentally Twitter aspires to be the most respected advertising platform in the world that strengthens your brand and grows your enterprise”. That may be the case on Musk’s watch, but under the now ex-CEO Parag Agrawal the platform was better known for its management’s liberal worldview and its clash with Musk’s libertarianism. He’s promised to reinstate Donald Trump’s account, suspended since the January 6 assault on the Capitol. If that troubles Agrawal, at least he stands to make $38 million on the deal.
The 100-year life health, education AND GOVERNMENT
“Better schools” was Rishi Sunak’s headline promise in his first speech as the UK’s new PM. Better how? Significant post-16 exam reform. Instead of A-Levels or Scottish Highers, he wants students to take a British Baccalaureate – a model lifted from the International Baccalaureate and a key proposal from the Times Education Commission. It would be much broader than A-Levels with more vocational strands available as well as mandatory English and Maths. It’s little surprise that Sunak has appointed the former skills minister Gillian Keegan, who left school at 16 to do an apprenticeship, to the education secretary role. Reminder: Sunak has at most two years to get reforms through before the next general election; has to work round academic terms so current students don’t suffer from any reforms; and has to find the cash to pay for them.
Our planet CLIMATE AND geopolitic
Rishi no go
Sunak said as a candidate that he cared about climate change. He doesn’t care enough to go to Cop27 next week, though. Downing Street says he won’t be there but is “absolutely committed” to the conference’s goal of limiting global warming to 1.5 degrees. This would cut more ice if the UK hadn’t hosted Cop26 and accepted a special responsibility for passing the climate change chalice to Egypt this year. More than 200 heads of government have been invited. Most, including Biden, are expected to attend, although one who definitely won’t is Vladimir Putin. Sunak says he has pressing matters to attend to at home, as if i) other leaders don’t, ii) most matters can’t be attended to nowadays from a laptop anywhere in the world and iii) irrefutable evidence of irreversible warming and the mass migration that will follow weren’t pressing enough.
CULTURE soCIETY, IDENTITY AND BELONGING
Chinese ‘police stations’
The Dutch government is investigating two “illegal” Chinese police stations that were allegedly being used to harass Chinese dissidents. RTL Nieuws, a local broadcaster, said two “overseas service stations” in Amsterdam and Rotterdam were set up in 2018 to help Chinese nationals with tasks like renewing driving licences but were also used to tracked critics of Beijing. Maxime Hovenkamp, from the Dutch foreign ministry, said the centres were illegal as Beijing hadn’t notified the Netherlands of their existence, and that officials were investigating the harassment claims. RTL interviewed Wang Jingyu, a Chinese dissident, who said he was contacted by the Rotterdam office and pressured to return to China to “solve my problems”. A September study by the Madrid-based rights group Safeguard Defenders said similar offices had been set up across 30 countries. China said the allegations of illegal police stations were “simply untrue”.
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Additional reporting by Phoebe Davis and Jessica Winch.
Photographs Getty Images
in the tortoise app today
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