#SOTD 62: A thriller on gas prices in the UK

Can you imagine an analysis of gas prices that reads like a thriller?

​Ed Conway, UK based journalist who works for Sky TV and The Times UK, manages to do just that in a fascinating tweet thread on gas prices in the UK.

Here’s how he sets the context, in a gripping way:

The rest of the thread is a mind-boggling series of facts – all of which taken together result in the seemingly absurd situation of the UK seeing high consumer gas prices despite a supply glut.

Here are the summarised facts:

1. There’s a contradiction in the UK natural gas supply and pricing scenario
   1. Natural gas wholesale prices in the UK is the lowest in 18 months (much lower than the EU price) due to a supply glut
   2. But consumer prices in the UK are still very high
2. The supply glut is driven by unique historical and geographical factors:
   1. Given the Ukraine war, Europe wants to reduce piped-gas supply from Russia
   2. Capacity on other (non-Russian) piped-gas supply sources like N. Africa and Azerbaijan is maxed out
   3. So EU has to depend on gas from a different source – LNG tankers
   4. But LNG needs to be unloaded on special terminals
   5. Europe (perhaps because of its dependence on cheaper piped gas) does not have enough LNG terminals
   6. But the UK does have them.
   7. So the UK is receiving a ton of additional LNG supply, a lot of which is ultimately bound for Europe through two dedicated pipelines. Read more in this part of the thread.
   8. But UK’s ability to ship gas to EU is (surprise, surprise) limited by its own pipeline capacity
   9. UK’s own consumer demand is lower now
   10. And the UK has limited storage capacity for gas, since it retired its biggest storage reservoir a few years ago
   11. So basically, a lot of gas coming to the UK, which can’t be shipped, sold or stored… and the resultant supply glut is depressing current wholesale prices
   12. but then…
3. Why does the domestic gas price in the UK continue to be high:
   1. Because that price is not determined by current wholesale prices. It is based on ‘year-ahead’ prices… which continue to be high

Overall, a gripping analysis and storytelling of the situation. Three storytelling techniques used by Ed Conway in the thread:

• Start with mystery and pique the audience’s curiosity
• Use contrast (e.g. between supply glut and high prices)
• Then control the release of information (one idea per tweet)… and build the flow between tweets
• Use simple, clear visuals

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And presto – you’ve got yourself a thriller on gas prices!

#SOTD 62