According to Bloomberg, the era of cheap natural gas is over. High demand for affordable fuel has significantly exceeded supply. This, in turn, triggered a drastic rise in global prices and depleted liquefied natural gas storage tanks.
The agency notes that over the past ten years, natural gas has been abundant and cheap, but now, the situation has changed. Prices for liquefied natural gas skyrocketed amid disruption to supply from the United States to Australia and strong demand in Asia. European natural gas rates soared by 1,000% from May 2020 to August 2021.
Experts believe that surging LNG prices will affect all sectors of the global economy and fuel inflation fears. This could result in increased costs in the petrochemical industry and intensified operation of power factories. Accordingly, consumers will face higher monthly energy and gas utility bills. In this case, such countries as Pakistan and Bangladesh will be the hardest-hit as their energy policies are based on the use of cheap gas.
However, the world is still dependent on this energy source and some countries are not ready to abandon it. With a view to achieving near-term green goals, many states prefer to use cleaner-burning gas as a replacement to coal. “Gas will be the transition fuel for decades to come as major economies are committed to reach carbon emission targets,” Chris Weafer, chief executive officer of advisory and analytics company Macro Advisory said. “The price of gas is more likely to stay elevated over the medium-term and to rise over the longer-term,” he added.
The International Energy Agency predicts that by 2024, demand for natural gas will jump by 7% from pre-pandemic levels. Looking ahead, the appetite for liquefied natural gas is expected to grow by 3.5% a year until 2035. According to Gavin Thompson, Asia-Pacific vice chairman at Wood Mackenzie Ltd, by 2035, LNG consumption in Asia is likely to outstrip supply by 160 million tons.
Currently, the European continent is experiencing an energy shock. The cost of gas and electricity has surged across Europe. Thus, wholesale power prices in Germany have risen by 60%. The current year has caused a lot of issues for enterprises in the euro area. Some of them were forced to close as they were unable to pay their energy and gas bills.
