Natural Gas

First, the surge in electricity consumption caused by climate change and extreme high temperature weather is one of the important reasons for this round of soaring natural gas prices. Since the beginning of this year, the world has experienced frequent extreme weather and abnormal climate conditions. Kuwait once reached a historical high of 73 degrees. The United States and Canada also frequently exceeded 50 degrees this summer. The hot air waves swept across the entire northern hemisphere, resulting in a surge in air-conditioning electricity consumption. Due to insufficient hydroelectric power generation and excessive emissions from coal power generation, major countries around the world have to increase investment in natural gas power generation, resulting in a sharp increase in natural gas consumption demand, which is an important reason for the demand side to raise gas prices. The irony is that, in pursuit of low prices, humans used a large number of high-emission fossil energy sources such as coal to generate electricity. A large amount of fossil energy caused greenhouse gas emissions, leading to climate change and high temperature weather. Now people have to spend expensive costs to generate electricity to cool down.

 Second, capital production restrictions, geopolitical conflicts, and insufficient production caused by the epidemic have led to a shortage of natural gas. Supply shortages are another factor in this round of natural gas price increases. The shareholders and the capital behind American shale gas manufacturers deliberately suppressed the production and exploitation of shale gas manufacturers in pursuit of the profits brought about by the sharp rise in gas prices; the Biden administration sold more US LNG in order to contain Russia. In addition, sanctions were imposed on many Russian natural gas projects such as Yamal and Beixi 2, which severely restricted Russia’s natural gas output and external supply. In addition, the epidemic is still repeated and raging around the world, with natural gas exploitation and Production activities are also affected by shutdowns and isolation measures, making it difficult to increase production.

Third, the large-scale global inflation caused by the Biden administration's multiple rounds of fiscal stimulus policies and the "indiscriminate bombing" of the printing presses is also an auxiliary factor that promotes the increase in natural gas prices. This round of long-term and unexpected inflation has pushed up the prices of a series of energy resources including steel, copper, aluminum, cement, glass, gasoline, and iron ore, and natural gas is no exception.

This round of increase in natural gas prices is a game between environmental idealism and energy cost realism when the supply and demand relationship is imbalanced. Thus it’s better to find a replacement of the natural gas, and sustain a reasonable cost of the fuel.