Gas prices: Putin ‘going to keep squeezing’ says expert
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Gas prices are on the rise and this may be far from temporary according to the chief executive of Ofgem. The Ofgem boss has warned several more energy suppliers are likely to go out of business in the coming months. But forecasts reveal the price crunch and upward trend in these costs could be a longer-term trend not only for the UK but across Europe and the USA.
The European energy market is in a state of crisis with prices expected to continue to rise.
The crisis has forced governments from across Europe to act according to protect customers from skyrocketing bills.
Many politicians and industry leaders have expressed concern about the coming winter – with fears an extremely cold winter could cause significant disruption.
EU energy ministers are due to meet this week in Slovenia to discuss global shortages as well as the bloc’s energy policy.
Wholesale gas prices across Europe have climbed by 280 percent – driven by a perfect storm of conditions which have led to an upshot in demand and diminishing supply.
In addition, the gas market chaos has led to a 100 percent or more surge in the USA.
Globally, demand has risen as China and other major economies bounce back from the Covid pandemic.
In Europe, the cold winter last year put extreme pressure on gas reserves meaning this year there is a limited supply.
CO2 prices hit a record €62 this month and Russia, a big exporter, has declined to increase gas supplies.
All of these complex economic, natural and political factors have contributed to pushing energy prices in one direction: up.
Natural gas prices fell across Europe, the USA and Japan in 2020 due to a lower energy demand amid the coronavirus pandemic.
However, in 2021, these prices are climbing once again.
According to data compiled by Statista in July, Europe is expected to see an annual average price of 5.5 nominal US dollars per million British thermal units.
This is 2.7 nominal US dollars per million British thermal units more than the US – which is at 2.8.
Japan is expected to have the highest rate at 8 nominal US dollars per million British thermal units.
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The forecast reveals the expected changes in natural gas prices up to 2035.
During that time, prices in Japan are expected to remain fairly constant according to the chart – even showing signs of decline beginning from 2025.
However, in Europe and the USA – the rates are showing signs of increase.
Over the next 14 years, the predicted nominal US dollars per million British thermal units in Europe and the USA are as follows:
- 2022: Europe – 5.6, USA – 2.9
- 2023: Europe – 5.6, USA – 2.9
- 2024: Europe – 5.7, USA – 3
- 2025: Europe – 5.8, USA – 3.1
- 2030: Europe – 6.1, USA – 3.5
- 2035: Europe – 6.5, USA – 4.
Will the situation really worsen?
Winter is a very stressful time for the energy sector with more people making demands on suppliers.
More generating plants in the UK come back online and more gas may come into the market.
Demand also increases significantly due to the cold weather.
Countries heavily reliant on natural gas and wind have and will continue to be the hardest hit.
Britain derives around 40 percent of its energy from natural gas and 20 percent from wind turbines meaning it has suffered the most so far.
But other nations are also likely to feel the pinch in the months and years ahead.
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