Gas prices should be coming down. I smell something fishy with Rishi.

Graham Charles Lear
7 min readOct 27, 2022

Bringing you news that the BBC ITV SKY don't seem to want you to know about

Putin’s gas bubble has burst, as prices tumble and UK consumers benefit

Debt forecasts of the UK’s “doom ’n’ gloomers” prove to be overstated by many £’s billions

Following the new Prime Minister’s rather alarming first address to the nation on Tuesday (25 Oct 2022) saying “Right now our country is facing a profound economic crisis”, I look at the good news of tumbling gas prices, falling mortgage rates, and the soaring pound.

The PM was quite correct to say that “Putin’s war in Ukraine has destabilised energy markets and supply chains the world over.” However, there are two key points to make.

  1. The UK’s problems when Liz Truss was still Prime Minister were not exclusive to the UK.

2. The markets are now calming down across the world, not just in the UK

Firstly, gas prices are almost back to normal

The EU’s — and in particular Germany’s — dependence on Russian gas caused a large spike in gas prices when Putin cut off gas supplies to several EU countries.

Now there are tankers filled with Liquefied Natural Gas (LNG) queueing up off the coast across Europe, hoping to see the gas price increase again before they dock at the LNG terminals to offload their cargo. The chart below comes from my research into the rise and fall of the price of natural gas over the past months.

Natural gas price — bursting the balloon

  • The spot price on 13 Sept 2022: € 195.60 per MWhr
  • The spot price on 27 Oct 2022: € 55.10 per MWhr

[Source: EEX, European exchange for gas.]

LNG storage tanks are full

A situation currently brewing in Spain highlights the continent’s LNG — the supercooled version of natural gas that can be transported on ships over long distances — storage capacity problem.

Seven ships are currently lingering in the Bay of Cadiz located in Southwestern Spain, as they wait to unload at the Huelva terminal, energy data provider Kpler told Insider.

Shipping data provider VesselsValue said that one of the ships — an LNG tanker with the capacity to carry 174,000 billion cubic meters of fuel — has been waiting in the bay for about 33 days.

The ships waiting in Spain are being hotly discussed in the energy circles, Viktor Katona, an energy analyst at Kpler said.

That’s because Spain has Europe’s largest network for six LNG regasification terminals — facilities that turn the liquefied fuel back to gas — said Katona. If Spain is reaching its maximum capacity, so could the rest of Europe, even though there aren’t so many ships hanging around in the major European LNG nations like the UK, France, and the Netherlands right now, he said.

I find Marine Trafic a good site to track shipping so that you can cross referance information on shipping. Just download the site and follow the intructions. Its a live site so you can see the movment in real time the moment shipping sets sail or docks

As a result, gas for next-day delivery on Spain’s PVB hub has been trading at only about $13 / mmBTU. This compares with more than $100 some weeks ago.

As winter approaches, prices will certainly rise again as they always do. However, it would seem that the ‘crisis’ is under control.

Secondly, UK mortgage rates are falling again

The average rate on a two-year fixed-rate mortgage has now dropped from 6.65% to 6.50%. To put this into context for readers, I looked at the Bank of England’s figures. I went back to 2008, 14 years ago, as this is what the BoE data download gave me.

Mortgage rates are falling again

2-year fixed-rate mortgages, based on 90% of house value

  • July 2008: 6.94%
  • Oct 2022 : 6.0%

[Sources: Bank of England to Sept 2022, then independent market data for Oct 2022.]

As this information shows, the current mortgage rate fixed for two years is below that in July 2008, 14 years ago.

Finally, the pound is surging again

Exchange rates are of course a function of the relative strength of each country’s currency. Recently the dollar gained in strength, partly due to the Fed’s aggressive rises in interest rates making the returns for investors better in the US. This affected the pound as well as the euro and other currencies.

In recent days the dollar has been falling. In turn, this has increased the pound-dollar exchange rate.

The pound has risen against the dollar again

The last month

  • 26 Sept 2022: $1.08
  • 25 Oct 2022: $1.15

[Source: Bank of England.]

I understand why the Prime Minister said what he said on Tuesday. The narrative is: “Liz Truss left us in a mess, it’s a disaster, but when things are better the improvement will all be down to me and my policies.”

Above I have tried to present a more nuanced picture. Liz Truss wasn’t embarked on a bold tax-cutting strategy. She was mostly saying she would not implement the tax and National Insurance rises which were coming from Rishi Sunak’s own policies before he resigned. Her entire emphasis was on growing the economy.

One of the major criticisms of Liz Truss and her Chancellor Kwasi Kwarteng was that they failed to reassure the markets with a fiscal strategy to cut spending, before announcing the ‘growth agenda’. Specifically, they were criticised for not involving the Office for Budget Responsibility (OBR) in their plans.

The supreme irony is that yesterday the new Chancellor, arch-Remainer Jeremy Hunt, announced that this very same OBR evaluation was being delayed until 17 November. In other words, nothing in the new government’s plans will be costed until then.

Perhaps the fact that the new PM used to work for Goldman Sachs might be a factor in why the markets haven’t reacted to this news….As I said I smell some fishy with our Rishi, perhaps you might smell the same fishy smell.

I would like to remind my readers that we British are in a great position since we left the EU, a far better position than any EU country will be to bounce back.

UK unemployment rate falls to 3.5% the lowest since 1974

UK exports to the EU in April, highest on record

UK exports to the EU in May, highest on Record

UK Exports to the EU in July, highest on Record

65 plus International deals better constructed for the UK's needs, which means YOUR needs.

We are no longer forced to operate under Byzantine EU which makes procurement by the UK public authority’s a tortuous quagmire.

Our tax laws set by the UK are now better suited to our needs

We are no longer bound to EU-set VAT rules. Our Government no matter who they are can cut them or even abolish them if they wish.

We are no longer bound by EU rules on import tariffs

UK regional funding is now defined by our elected government ministers and not by some faceless EU bureaucrat that wants your councils to jump through hoops to get your own money that you have paid in tax.

The UK has restored democratic control over our lawmaking. It's now OUR law and no one else’s law.

We have restored the UK Supreme Court as the final arbiter of the law that applies in the UK.

We have ended the acceptance of ID cards for most EU nationals travelling to the UK.

We are establishing our own subsidy regime to support British businesses and innovation.

We are Reforming our alcohol duties.

We are establishing new Trade and Investment Hubs in Scotland, Wales and Northern Ireland and a second Department for International Trade headquarters in Darlington.

We have Raised the contactless purchase limit to £100 — higher than the EU would allow.

We are removing the EU’s ‘Vnuk’ motor insurance law to prevent increased premiums (of £50 a year) for GB motorists.

Reduced the cost of holidays in Europe by introducing a zero rate of VAT.

Provided life-changing experiences and opportunities in education and training across the world through the Turing Scheme.

Banned the export of live animals for fattening and slaughter. Something we could not do by being in the EU.

Ended the abhorrent, cruel practice of puppy smuggling and low-welfare pet imports. Something we could not do by being in the EU.

Building animal welfare into our independent trade policy. Again something we could not do by being in the EU.

Became a dialogue partner of the Association of Southeast Asian Nations (ASEAN) — its first in 25 years. Again something we could not do by being in the EU.

These are just a few of the things we now can do by being out of the EU and it's why we are in a far better position than any EU.

Sources: Bank of England | TFF energy hub



Graham Charles Lear

What is life without a little controversy in it? Quite boring and sterile would be my answer.