“Ah ya lads, but like, the gas we are selling you today was bought at the old high price, do ya get me now like”.
I found this explanation of “Futures Contracts”.
“Futures are derivative financial contracts that obligate the parties to transact an asset at a predetermined future date and price. Here, the buyer must purchase or the seller must sell the underlying asset at the set price, regardless of the current market price at the expiration date.”
The bit at the end kind of confused me about the market price at expiration date. Does this mean that even if they have residual amounts left over from this contract, they still have to sell it at the price as agreed in that particular contract? Regardless of prices dropping or not.
Since I reckon a lot of companies bought as much product as possible at the time in a panic, the high prices could be with us for much longer until they can get rid of the product tied to those specific contracts.
Maybe someone with a better head for these things can explain this better to me.
> However, it also said that, because of hedging, it will likely take time for retail prices to reflect the declines in wholesale prices “until we have seen sustained and further reductions in wholesale prices, and the impacts of hedging work through”.
Well tough luck buddy, you made a bad purchase. Now off you go and reduce the bills to the level of 2021 😉 ~ would be a response from a competent government but not by the Irish one.
What is it going to take to get electricity and gas prices that are the highest in Europe down? New entrant? Political pressure?
Energy companies have been hiding behind the hedging excuse (which as hedges gradually unwind is becoming less and less of a genuine excuse) for way too long now.
Blame the companies all ye want, but it’s the government that’s at fault. They should put a halt to this rip off immediately and financially punish ALL energy suppliers if it’s proven that they are ripping the public off
It was months after the UK prices skyrocketed that we had major price rises.
6 comments
“Ah ya lads, but like, the gas we are selling you today was bought at the old high price, do ya get me now like”.
I found this explanation of “Futures Contracts”.
“Futures are derivative financial contracts that obligate the parties to transact an asset at a predetermined future date and price. Here, the buyer must purchase or the seller must sell the underlying asset at the set price, regardless of the current market price at the expiration date.”
The bit at the end kind of confused me about the market price at expiration date. Does this mean that even if they have residual amounts left over from this contract, they still have to sell it at the price as agreed in that particular contract? Regardless of prices dropping or not.
Since I reckon a lot of companies bought as much product as possible at the time in a panic, the high prices could be with us for much longer until they can get rid of the product tied to those specific contracts.
Maybe someone with a better head for these things can explain this better to me.
> However, it also said that, because of hedging, it will likely take time for retail prices to reflect the declines in wholesale prices “until we have seen sustained and further reductions in wholesale prices, and the impacts of hedging work through”.
Well tough luck buddy, you made a bad purchase. Now off you go and reduce the bills to the level of 2021 😉 ~ would be a response from a competent government but not by the Irish one.
What is it going to take to get electricity and gas prices that are the highest in Europe down? New entrant? Political pressure?
Energy companies have been hiding behind the hedging excuse (which as hedges gradually unwind is becoming less and less of a genuine excuse) for way too long now.
Blame the companies all ye want, but it’s the government that’s at fault. They should put a halt to this rip off immediately and financially punish ALL energy suppliers if it’s proven that they are ripping the public off
It was months after the UK prices skyrocketed that we had major price rises.