Europe is more reliant on natural gas to heat homes and meet the energy needs of factories than ever before, and the increasing demand comes amid efforts to stop reliance on coal, and a general trend to use clean energy sources.
Winter in the northern hemisphere is expected to drive up natural gas prices in most parts of the world.
The sharp rise in natural gas prices has forced some of the fertilizer producers in Europe to cut production, with more factors expected, which may increase costs for farmers, amid the possibility of an increase in global food inflation, according to Bloomberg.
global energy crisis
There is not enough natural gas to fuel the economy recovering from the “post-coronavirus period,” and this poses obstacles to refilling depleted stocks before the December frost arrives. If the winter is cold, “the concern is that there is not enough natural gas” to use for heating in parts of Europe.
Hochstein added that for some countries, “the damage will not only be in the value of the recession but will affect the ability of European countries to provide natural gas for heating, which “affects everyone’s lives.”
Qatar’s Energy Minister, Saad Al-Kaabi, warned at an industry conference this month that the demand for natural gas is unprecedented from all of Qatar’s contractors, but “it is not possible to provide care for everyone,” he said.
It is possible that the “cold surprise” will force more energy companies to plunge into the market to buy emergency supplies of gas at high prices, and that is exactly what happened last December.
Countries are seeking to meet their energy needs in light of fierce competition for natural gas, and natural gas exporters such as Russia are moving in parallel, to increase the supply of natural gas, and the crisis is expected to worsen if temperatures drop.
The crisis in Europe portends trouble for the rest of the world, and the reason is that the lack of energy in Europe was the indicator to warn governments of the possibility of outages and total closure of factories, as for stocks in European warehouses, they reached their lowest levels “historically”, according to Bloomberg.
The concern is over the prospect of calmer weather, which could reduce wind turbine power production, while Europe’s most popular nuclear plants are being phased out, leaving natural gas topping global demand, while pipeline flows from Russia Norway is limited.
LNG importers in Asia are currently paying record prices to secure supplies, with some starting to spill polluting fuels such as coal and heating oil if they don’t get their energy.
The lack of energy in general increases the obstacles to achieving sustainable energy goals. Natural gas emits carbon monoxide, which is emitted by coal when burned.
China has not filled up stocks quickly enough despite being the world’s largest buyer of natural gas, considering that imports were double what they were last year, according to customs data.
Several Chinese provinces are also rationalizing electric power for various industries, in order to achieve President Xi Jinping’s goals in terms of energy efficiency, reducing pollution, and relying on clean energy.
Slowing flows in Brazil’s Parana River Basin have reduced hydropower production, while the Brazilian government is forced to rely more on natural gas.
While Brazil boosted gas imports to their highest levels in July, energy bills also rose. With inflation soaring, President Jair Bolsonaro’s chances in next year’s elections could be damaged.
The cost of securing Japanese government supplies has sparked political controversy in Pakistan, where opposition politicians have demanded an investigation into procurement by the state-owned importer.
The British crisis continues
British Transport Secretary Grant Shapps accused truck industry representatives on Sunday of helping spark a gasoline crisis as he defended “post-Brexit” immigration policy to ease a mounting supply crisis.
High energy prices in Britain have forced many suppliers out of business, with gas prices in Europe rising 500% last year.
The prospect of accelerating energy costs, combined with backlogged supply chains and high food prices over a decade, may make more central bankers wonder whether the jump in inflation is as fleeting as they had hoped.
Goldman Sachs raised its year-end Brent price forecast to $90 a barrel, from $80, as demand for fuel recovered at a faster-than-expected rate.
Crude traded at $79.19 a barrel, while the price of West Texas crude was at $75.08 a barrel, according to Reuters.
Goldman Sachs lowered its forecast for oil prices for the second and fourth quarters of 2022 to $80, from $85 a barrel.
While oil producers expect global fuel demand to return to pre-Covid-19 levels by next year, as the economy recovers from the consequences of Covid-19, the excess refining capacity represents an effective pressure, and oil sector leaders said that despite the continued increase in Cases of virus infection in many markets, which harmed the demand for some petroleum derivatives such as jet fuel, the consumption indicators for diesel and gasoline indicate higher growth.