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Gas Price Cap Could Cause Irreversible Harm To Energy Markets

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  • The European Commission issued a statement declaring what it called a “safety price ceiling” for gas prices set at 275 euros per MWh.
  • The threat of a gas price cap on front-month gas contracts would strain the market and effectively make it less transparent.
  • Traders are especially concerned about the idea to tie the price of LNG to the price of benchmark EU gas futures.

Traders

Earlier this week, the European Commission issued a statement declaring what it called a “safety price ceiling” for gas prices set at 275 euros, or $283 dollars, per megawatt-hour.

Hailed as the long-awaited gas price cap that EU members have been discussing for weeks now, the ceiling’s aim, according to the Commission, will be used as a “temporary and well-targeted instrument to automatically intervene on the gas markets in case of extreme gas price hikes.”

While national governments may be happy with this new instrument, market players are the opposite of happy. In fact, traders have warned that using the instrument could cause irreversible harm to energy markets in Europe.

“Even a short intervention would have severe, unintended and irreversible consequences in harming market confidence that the value of gas is known and transparent,” said the European Federation of Energy Traders this week, following the news broken by the European Commission, as quoted by the Financial Times. What traders—and exchanges—argue is that the threat of a gas price cap on front-month gas contracts would strain the market and effectively make it less transparent. Even worse, according to them, is the EC’s idea to basically tie benchmark European gas futures prices to the price of liquefied natural gas on the spot market.

 

The tie to LNG prices is one of two conditions that must be met for the “safety price ceiling” to be triggered automatically. As stated by the EC, these are, first, when “the front-month TTF derivate settlement price exceeds €275 for two weeks” and, second, when “TTF prices are €58 higher than the LNG reference price for 10 consecutive trading days within the two weeks.”

As soon as both of these things happen, regulators will swing into action, and after a day of notifications to all relevant authorities, the ceiling will enter into effect, and front-month orders for gas naming prices that are above 275 euros will not be accepted.

According to the Commission, the fact that the price cap is limited to front-month contracts ensures the stability of the financial system and futures markets by leaving traders free to trade gas over the counter and on the spot market.

According to traders and exchange operators, this is not the case. Per the FT report on the topic, the industry is worried about unexpected and excessively high margin calls on the over-the-counter market, as well as the ability of exchanges to tackle defaults.

The LNG tie is of particular concern because, according to traders, LNG markets are a lot more illiquid and volatile than the TTF market, which is based on actual transactions.

The trading world is so concerned about the gas price cap that the European Federation of Energy Traders warned the Commission this week that the cap might force exchanges to suspend trading in case they could “not meet obligations on running fair and orderly markets.”

Meanwhile, the European Central Bank has also warned against moving trades from exchanges to over-the-counter market, which, featuring direct transactions between parties, is a lot more opaque and a lot less regulated than the exchange.

The traders are not alone in their concerns, which also include a worry that the proposed cap mechanism has not been tested for faults. The Commission just said it would become effective next January.

“It is unrealistic to assume this [ensuring the cap won’t put markets in jeopardy] can be achieved within a short timeframe and certainly not before the end of this winter,” the head of the European association of energy exchanges, Christian Baer, said.

Some European diplomats appear to share these concerns, according to the FT. One unnamed member of the diplomatic body said this week that “Safeguards checks are only applied ex-post [so] how can compliance with the safeguards be ensured when the measure is in place? It is similar to installing airbags after you ran your car into an accident.”

Per the Commission’s proposal, there are two ways to ensure the cap does no harm to markets: one, by deactivating it or by preventing its activation “in case relevant authorities, including the ECB, warn of such risks materialising.”

The language of the statement about the price cap is quite general, as the language of all such statements tends to be. There is little specificity or, indeed, examples of the risks mentioned above that would trigger the deactivation of the cap—facts that no doubt intensify traders’ worries.

There is also another worry that may potentially be a bigger one, and it has nothing to do with trading and financial markets. Several EU members are concerned that the price cap will encourage greater gas demand at a time when demand needs to be reduced.

The Commission has a response to that: triggering the mandatory energy savings mechanism agreed upon earlier this year and launched in its voluntary version a couple of months ago. Whether this would be enough and, more importantly, whether it would not have some severe unintended consequences remains an open question for now.

By Irina Slav for Oilprice.com

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What Difference Will You Make to an Employer?

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Ex-Employer (Job)

It’s common knowledge that companies don’t hire the most qualified candidates. Employers hire the person they believe will deliver the best value in exchange for their payroll cost.

Since most job seekers know the above, I’m surprised that so few mention their Employee Value Proposition (EVP). Most job seekers list their education, skills, and experience without substantiating them and expect employers to determine whether they can benefit their company; hence, most resumes and LinkedIn profiles are just a list of opinions—borderline platitudes—that are meaningless and, therefore, have no value. Job seekers need to better explain, along with providing evidence, how they’ll contribute to an employer’s success.

Employers don’t hire opinions (read: talk is cheap); they hire results.

You’re not offering anything tangible when you claim:

 

  • I’m a great communicator.
  • I’m detail oriented.
  • I’m a team player.

 

Tangible:

 

  • “At Global Dynamics, I held quarterly town hall meetings with my 22 sales reps, highlighting our accomplishments, identifying opportunity areas, and recognizing outstanding performers.”
  • “For eight years, I managed Vandelay Industries IT department, overseeing a staff of 18 and a 12-million-dollar budget while coordinating cross-specialty projects. My strong attention to detail is why I never exceeded budget.”
  • “While working at Cyberdyne Systems, I was part of the customer service team, consisting of nine of us, striving to improve our response time. Through collaboration and sharing of best practices, we reduced our average response time from 48 to 12 business hours, resulting in a 35% improvement in customer feedback ratings.”

 

These examples of tangible answers provide employers with what they most want to hear from candidates but rarely do; what value the candidate will bring to the company. Typically, job seekers present their skills, experience, and unsubstantiated opinions and expect recruiters and employers to figure out their value, which is a lazy practice.

Getting hired isn’t based on “I have an MBA in Marketing and Sales,” “I’ve been a web designer for over 15 years,” “I’m young, beautiful and energetic,” blah, blah, blah. Likewise, being rejected isn’t based on “I’m overqualified,” “I’m too old,” “I don’t have enough education,” blah, blah, blah. Getting hired depends entirely on showing employers that you can add value and substance to their company; that you’ll serve a purpose.

When you articulate a solid value offer, the “blah, blah, blah” doesn’t matter. Job seekers focus too much on the “blah, blah, blah,” and when not hired, they say, “It’s not me, it’s…” The biggest mistake I see job seekers make is focusing on the “blah, blah, blah”—their experience and education—believing this is what interests employers. Hiring managers are more interested in whether you can solve the problems the position exists to solve than in your education and experience.

 

Not impressive: Education

Impressive: A track record of achieving tangible results.

 

You aren’t who you say you are; you are what you do.

 

If you want to be somebody who works hard, you have to actually work hard. If you want to be somebody who goes to the gym, you actually have to go to the gym. If you want to be a good friend, spouse, or colleague, you have to actually be a good friend, spouse, or colleague. Actions build reputations, not words.

The biggest challenge job seekers face today is differentiating themselves. To stand out and be memorable, don’t be like most job seekers, someone who’s all talk and no action. Any recruiter or hiring manager will tell you that the job market is heavily populated with job seekers who talk themselves up, talk a “good game” about everything they can “supposedly” do, drop names, etc., but have nothing to show for it.

More than ever, employers want to hear candidates offer a value proposition summarizing what value they bring. If you’re looking for a low-hanging fruit method to differentiate yourself, do what job seekers hardly ever do and make a hard-to-ignore value proposition.

  1. Increase sales: “Based on my experience managing Regina and Saskatoon for PharmaKorp, I’m confident that I can increase BioGen’s sales by no less than 25% in Winnipeg and the surrounding area by the end of 2025.”
  2. Reduce cost: “During my 12 years as Taco Town’s head of purchasing, I renegotiated contracts with key suppliers, resulting in 15% cost savings, saving the company over $450,000 annually. I know I can do the same for The Pasta House.”
  3. Increase customer satisfaction:“During my time at Globex Corporation, I established a systematic feedback mechanism that enabled customers to share their experiences. This led to targeted improvements, increasing our Net Promoter Score by 15 points. I can increase Dunder Mifflin’s net promoter score.”
  4. Save time: “As Zap Delivery’s dispatcher, I implemented advanced routing software that analyzed traffic patterns, reducing average delivery times by 20%. My implementation of this software at Froggy’s Delivery can reduce your delivery times by at least 20%, if not more.”

 

If you want to achieve job search success as soon as possible, structure your job search with a single thread that’s evident and consistent throughout your résumé, LinkedIn profile, cover letters and especially during interviews; clearly convey what difference you’ll make to the employer.

_____________________________________________________________________

 

Nick Kossovan, a well-seasoned veteran of the corporate landscape, offers “unsweetened” job search advice. You can send Nick your questions to artoffindingwork@gmail.com.

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Netflix’s subscriber growth slows as gains from password-sharing crackdown subside

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Netflix on Thursday reported that its subscriber growth slowed dramatically during the summer, a sign the huge gains from the video-streaming service’s crackdown on freeloading viewers is tapering off.

The 5.1 million subscribers that Netflix added during the July-September period represented a 42% decline from the total gained during the same time last year. Even so, the company’s revenue and profit rose at a faster pace than analysts had projected, according to FactSet Research.

Netflix ended September with 282.7 million worldwide subscribers — far more than any other streaming service.

The Los Gatos, California, company earned $2.36 billion, or $5.40 per share, a 41% increase from the same time last year. Revenue climbed 15% from a year ago to $9.82 billion. Netflix management predicted the company’s revenue will rise at the same 15% year-over-year pace during the October-December period, slightly than better than analysts have been expecting.

The strong financial performance in the past quarter coupled with the upbeat forecast eclipsed any worries about slowing subscriber growth. Netflix’s stock price surged nearly 4% in extended trading after the numbers came out, building upon a more than 40% increase in the company’s shares so far this year.

The past quarter’s subscriber gains were the lowest posted in any three-month period since the beginning of last year. That drop-off indicates Netflix is shifting to a new phase after reaping the benefits from a ban on the once-rampant practice of sharing account passwords that enabled an estimated 100 million people watch its popular service without paying for it.

The crackdown, triggered by a rare loss of subscribers coming out of the pandemic in 2022, helped Netflix add 57 million subscribers from June 2022 through this June — an average of more than 7 million per quarter, while many of its industry rivals have been struggling as households curbed their discretionary spending.

Netflix’s gains also were propelled by a low-priced version of its service that included commercials for the first time in its history. The company still is only getting a small fraction of its revenue from the 2-year-old advertising push, but Netflix is intensifying its focus on that segment of its business to help boost its profits.

In a letter to shareholder, Netflix reiterated previous cautionary notes about its expansion into advertising, though the low-priced option including commercials has become its fastest growing segment.

“We have much more work to do improving our offering for advertisers, which will be a priority over the next few years,” Netflix management wrote in the letter.

As part of its evolution, Netflix has been increasingly supplementing its lineup of scripted TV series and movies with live programming, such as a Labor Day spectacle featuring renowned glutton Joey Chestnut setting a world record for gorging on hot dogs in a showdown with his longtime nemesis Takeru Kobayashi.

Netflix will be trying to attract more viewer during the current quarter with a Nov. 15 fight pitting former heavyweight champion Mike Tyson against Jake Paul, a YouTube sensation turned boxer, and two National Football League games on Christmas Day.

The Canadian Press. All rights reserved.

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All Magic Spells (TM) : Top Converting Magic Spell eCommerce Store

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