@Smurf1976 Feel free to chime in with anything you think I've missed here.
A few thoughts on the energy stuff (keeping the focus on the financial more than the engineering):
At the consumer (that is, the actual machine that's using the energy) level in some situations energy sources are interchangeable, in others they're not. For examples:
A car needs petrol / diesel and that's the only thing it can use to power it. To use anything else requires fitting a new engine or, more likely, replacing the entire vehicle.
Aircraft are even stricter on fuel specifications.
On the other hand, electricity is electricity regardless of how it was produced. If the price of gas drops below the price of coal well then it's dead easy to burn more gas and less coal.
In some cases that can be done in the same power station simply by changing what fuel it burns (and in some cases that switch can be made with the plant remaining at full output uninterrupted) but it's also about changing which ones run flat out constantly (base load) and which are backed off when demand is down. Coal doesn't have unlimited flexibility there, it's inferior to oil or gas in that regard, but it does have a reasonable amount. If price warrants then coal can be turned down roughly half way (varies depending on the facility in question, it's in the 30 - 70% range for any individual facility) at off-peak times and gas left running yes, it's doable within technical limits if there's a financial reason to.
Put that all together and there are two classes of energy consumption:
1. Just need anything that burns and have at least some ability to switch between fuels. Might not be able to totally eliminate oil, gas or coal but there's reasonable ability to shift.
2. Locked in and there's zero flexibility. If your heating needs natural gas and your car needs petrol well then coal, hydro or nuclear aren't going to help in the slightest.
The ability of those in group 1 to shift production can (does) balance physical markets to some extent. Eg there have been plenty of credible reports of switching from LNG to fuel oil for power generation in some countries over the past few months, that being driven by purely economic considerations. So that drops LNG consumption and raises oil consumption very directly.
Once it gets outside that however, once all those who can switch away from a high cost fuel to a cheaper one have done so, well then it's game on.
Future use of EV's aside, motorists are locked into petrol / diesel right now. That goes for everyone from motorcycles to road trains. Wherever the oil price goes they've got no choice but to pay it if they want to keep driving.
Same with gas heating and this one is particularly relevant. The average house in the UK (for example) has a gas boiler in the kitchen which provides heating, via hydronic radiators, to the whole house. That boiler burns gas and nothing else. Same goes for much of Europe, it's all hydronic heating with gas boilers or, if gas isn't available, the boiler is oil-fired. Assuming the occupant doesn't wish to shiver through winter, there's no real choice other than to pay whatever it costs.
That dynamic, the lack of ability to shift to any alternative, can and will push prices to extreme levels once the ability to contain it within group 1 users (power generation etc) is breached and that's exactly what happened this past northern winter, gas prices went through the roof across the EU and UK (in this context there's no practical distinction between the UK and EU since physically it's one interconnected system).
Now for the shocker and this one's closer to home......
Natural gas price in Victoria during 2021 was $6 - $8 per GJ most of the year.
January 2022 it was $10 in round figures.
Now for the ride we've had over the past few days. This is actual spot price data from AEMO and is thus "official".
Prices are set in 4 hourly blocks, that's how the industry works, and the times I've shown are the start of each block. Eg 10:00 means 10:00 to 13:59 and so on.
Exception is overnight as there's no 2am period, a single price applies 22:00 - 06:00. That's just how it's done, one of those things just to be aware of.
2 May @ 18:00 = $15.60
2 May @ 22:00 = $15.65
3 May @ 06:00 = $16.12
3 May @ 10:00 = $16.39
3 May @ 14:00 = $16.73
3 May @ 18:00 = $16.90
3 May @ 22:00 = $16.72
4 May @ 06:00 = $17.14
4 May @ 10:00 = $16.90
4 May @ 14:00 = $17.00
4 May @ 18:00 = $17.35
4 May @ 22:00 = $19:10
5 May @ 06:00 = $19.24
5 May @ 10:00 = $19.10
5 May @ 14:00 = $22.00
5 May @ 18:00 = $23.64
5 May @ 22:00 = $22.99
So what happened? How did we end up with a more than 50% price jump in 3 days?
Weather!
Daily maximum temperatures for Melbourne (Olympic Park BOM site):
2 May = 22.1
3 May = 20.7
4 May = 16.4
5 May = 14.1
Gas is the predominant method of heating buildings in Victoria such that as the temperature drops, consumption soars indeed typical winter consumption is triple that of summer and on a particularly cold day that becomes quadruple.
This screenshot of the AEMO public website shows it clearly. Blue on the chart is gas consumption, purple line is price:
So there you have it and what it comes down to is that supply really just isn't there. Demand increased to 906 TJ (terajoules) on the 6th May, from 687 TJ on the 5th and 465 TJ on the 4th due to the weather and up goes the price.
Now I'll point out a few things:
906 TJ isn't particularly high. Through winter daily demand over 1000 TJ is routine and at the extreme it tops 1200 TJ.
It's not actually winter yet! It's only May and we're right at the very beginning of the heating season, this is literally the first days of significant heating use for 2022. There's the whole winter season yet to come!
The ACCC's calculated LNG netback price, which can be found on their website, is as follows:
May 2022 (actual data based on contracts etc) = $38.09
June 2022 = $27.04
July 2022 = $26.47
August 2022 = $27.06
September 2022 = $29.91
October 2022 = $32.46
November 2022 = $33.54
December 2022 = $33.59
So assuming a reasonably normal winter which brings Australian east coast (which in this context is all states except WA) demand up to the point where physical gas production cannot meet both domestic demand + the physical limit on exports (from Qld) then we see domestic prices rise up to that LNG netback price.
In the event that there's a physical disruption to production, or the netback price rises further, well then the sky's the limit.
Now I hear everyone say that either they don't use gas at all, or their gas price is at fixed rates not a spot price that constantly changes. Good point but....
For your fixed price domestic supply, you can be pretty sure that a rise in the wholesale price will be passed on at some point. Gas retailers aren't there to lose money so whilst the price might not vary daily, ultimately it'll be passed through.
And the big one - there's an awful lot of things you do buy which have gas as an input. If it's cooked or heated at an industrial scale then most likely the heat source is gas. Then there's everything from gas-fired power generation to hotels using gas to heat water to large commercial buildings heated with gas and so on. All of that's ultimately going to be passed onto consumers one way or another either directly or indirectly but bottom line is
someone will be paying.
We are of course also seeing that energy price inflation for petroleum products as everyone who uses them will be well aware. And of course it's not just the petrol or diesel you use directly but the reality that every tractor and harvester is run on diesel, so is almost every truck and so on. Whatever you eat today, diesel was an input to its supply that's a given. Then there's public transport and so on too.
Plus also electricity. Average spot prices per MWh across all states excluding NT:
2019 calendar year average = $89.31
2020 = $57.03
2021 = $77.47
September 2021 = $40.90
October 2021 = $72.69
November 2021 = $103.77
December 2021 = $107.47
January 2022 = $126.12
February 2022 = $150.31
March 2022 = $124.95
April 2022 = $213.74
2022 calendar year to date average = $152.07
Even those figures are slightly understating it since the inclusion of WA and Tas is skewing them lower. Average price for Queensland in April 2022 was $316.35
My point in all that is purely an economic one, inflation, not an engineering one. Some technical mishaps with production haven't helped but primarily it's an economic situation more than anything else. Loss of a coal plant isn't such a deal if you can afford to run gas turbines as a replacement but when gas costs a fortune that's very different. So there's a technical aspect to it but ultimately it's the price of fuel that's the key issue driving it.
Now that's all about energy yes but I've no doubt similar would apply to various metals and other things with far reaching consequences.