"“We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.” "

Chinese premier Wen Jiabao 12th March 2009

""We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system."

Timothy Geithner US Secretary of the Treasury, previously President of the Federal Reserve Bank of New York.1/3/2009

Wednesday, April 04, 2007

Japan faces long hot summer - electricity costs to rise by at least 50%

Lord Patel reported on January 31 that the Tokyo Electric Power Company (TEPCO) detailed 199 case of data falsification and other irregularities between 1979 and 2002 at its 13 nuclear plants in a report to the Nuclear and Industrial Safety Agency. Japan's 55 reactors have been hit by a series of regulatory outages over the past three years, which have kept a number of them off-line, and kept the national average capacity factor below 70%.

There are now reports that after this continuing ( and it appears enduring) scandal Japanese wholesale electricity prices will rise this summer by 58% to exceed 21 yen (17.7 cents) a kilowatt-hour for the peak hours of 1 p.m. to 4 p.m. as demand rises in July and August. Tommorrows price is for example 13.53 yen up from 13.33 yesterday.

The latest global figures available (for 2004) show that Japan's retail electricity prices for household use averaged 19.6 cents US a kilowatt-hour, compared with 8.9 cents for the U.S., 17.6 cents for Germany, and 14.1 cents for France (source OECD).

These price rises relate to the reduced nuclear capacity and the switch to oil which is a more costly power generation route . Ten regional electricity utilities burned less than 1 million kilolitres in February alone compared with 2.3 Kilolitres in the whole of 2006.

The Japanese meteorogical agency reports that temperatures have been higher this spring and expect a warmer than average summer. In the financial districts of Tokyo (Otemachi) the February temperature ( 47 F) was the highest for 131 years. With summeriem temperatures in Japan's cities around 27 degrees celsius the air con's will be working overtime.


Anonymous said...

Will this increase in electricity price feed in to what the wonks call inflation (ie non-disguisable effect of increase of money supply) and hence lead to an increase in Yen interest rates and hence to a ... etc etc ...

Shutter said...

Apart from sheer entertainment moxed with the od god rant the principal function of this blog is to seize the straws in the wind, items, events, that presage larger and more critical events.

A major hobby horse is the UK's persistence in not only being content to watch it's wsting natural energy asets, but to be content to watch as nothing is done. Hence FCUKED - the forth Coming UK Energy defecit.

The fast reolving door of the Minister if Energy's effice has stopped and we now have MR darling who tops the list of bovine, scientifically illiterate peopel who have been thrust on the energy industry - and of course the industrial and commerical users of that energy.

They perist in ignoring what is happening elsewhere and how in the future, we will be competing to buy LNG, oil, even electricity if not ina world market - but at world market prices.

The Japanese have always had to import virtually all their energy and of course developed as many nuclear power stations as France - now their past sins are coming back to haunt and expensive oil will make more expensive electricity.

This must impact on industrial costs and feed into inflation - of course they have pursued overseas sourcing for decades to contol costs but it will impact on the domestic market.

Fortunately this (as has happened in the UK - see recent piece on the 2006 Energy statistics) results in a reduction in demand as prices soar - in what I believe has been a deliberate Government policy - regardless that this also reflects reduced industrial output.

E.g Wylfa will close and almost certainly the associated aluminium smelter.

Japan is a massive economy and any predictions are hedged with all sorts of caveats (apart from the fact that they will always sunsidise their rice farmers) but this energu cost rise must affect inflation and consequently interest rates.

There are 2 peak oils ;

1. The physical one (and maybe as is being discussed a coal peak)

2. A predeceding peak when the world wakes up to the inevitability of 1 above.

That's when you send for the guns, lawyers and money. You would find it interesting to take some time investigating the growth of the defence forces (and defence industry - especially missiles) in Japan. The recent agreed reductions of US forces, over Okinawa etc.,

There has been considerable comment about rises in yen interest rates, the end of the carry trade etc., which are premature and in in a sense eclipsed by what will happen to Treasury Bonds and where the US will finally act as the $ slides against the Euro.

Bottom line, taking one thing with the other, in certeres paribus as the oikonomists say, yes, the effects will be contributory to rising yen interest rates.

Of more concern to you should be the coming problems of the prime lenders in the US housing market - the sub prime was always the equivalent to what in the UK we used to calla "flapper" track at dog racing - you couldn't believe the word of anybody.

Lending on double wides and Levittown houses, hoeplesly overpriced to people who lied about their income was always a a recipe fro rpoblems. Now we will see as the season advances the defaults rise on Middle America (whose wages (as the US$ declines) have stayed static at best, declined at worst, who now see their premier asset losing value and remaining unsold.

Apologise for going on.

Anonymous said...

points noted, thanks.

(C) Very Seriously Disorganised Criminals 2002/3/4/5/6/7/8/9 - copy anything you wish