By Ag Metal Miner, via OilPrice.com
Both experts and everyday consumers remain at odds about the current state of the global natural gas market. The main point of contention is whether U.S. prices will drop significantly or rise further. With inflation hitting record highs this past year, nobody can blame consumers for being wary. Most experts agree that gas prices and demand will keep up their pace. The ongoing European energy crisis weighed into this heavily. EU countries continue to search for alternatives to Russian fuel. However, Europe’s energy problems will likely ripple into the entirety of the international energy market. In fact, it might be happening already.
LNG Crisis in Europe Spilling into the U.S.
The Nord Stream 1 pipeline running at low capacities could hit the U.S. harder than expected. With sky-high gas prices across Europe and dwindling reserves, the EU has been scouring the world for alternatives to Russian energy. Because of this, global gas competition recently experienced a sharp – and ongoing – rise.
Along with this, the winter months will prove the most strenuous on the average consumer’s wallet. After all, millions of American and European homes rely on natural gas for heat. With winter quickly approaching, the situation looks grim. While bills like the Inflation Reduction Act will likely take some of the pressure off of natural gas demand in the US, those initiatives will take time to implement and build. The real question remains; will they be ready in 3-4 months' time?
On the positive side, Europe’s frantic search for solutions could pay off in the near future. Already, countries like Norway, the US, and the UK have stepped up to aid Germany and other central EU nations in getting alternative gas imports. However, whether or not these sources are enough to tide the EU over through winter remains up for debate.
Asia Watching Natural Gas Reserves Closely
With competition for natural gas hitting a fever pitch, many speculate gas prices will continue rising worldwide. Not only are natural gas supplies in the US being shipped to Europe to aid with the energy crisis, but record-setting heat waves mean more power consumption as American, and European homes are relying more and more on air conditioning.
Even Asia has started feeling the strain of the Western energy crisis these past few weeks. For instance, Japan has begun looking for alternative sources of natural gas in light of the war in Ukraine and gas shortages in Europe. As with the West, Northern Asia is firmly focused on making it through the coming winter.
In the past couple of weeks, Russia started hinting that it might also limit gas supplies to Northern Asia. Russia halted a large shipment of natural gas bound for its southern neighbors.
Countries like South Korea and Japan, which have minimal natural gas reserves of their own, are heavily reliant on natural gas imports. This puts them in direct competition with European, which has its eye on LNG supplies shipped by sea. Though the battle to secure supplies just started, many experts expect it to intensify in the coming years.