European Energy Crisis Will Go Global Soon
In the modern world, the energy crisis that has begun in Europe will not be able to be contained for a long time at the regional level and will soon become global - it is only a matter of time. Especially in the context of disrupted supply chains and the rush to cut investments in the extraction of fossil energy raw materials, writes the American publication OilPrice.
From Europe, the energy crisis could move to the United States, which are currently one of the leading gas producers on the planet. US LNG exporters are experiencing significant increases in demand from Asia and Europe as the recovery economic activity there has led to an increase in electricity demand. According to a report by the Financial Times, there is already a war between Asian and European buyers over US LNG, and Asia is beating Europe.
According to the Wall Street Journal's Jinju Lee, high energy prices could be the next "hot import" for the US this winter. The expert explained that the level of gas replenishment this season is low - the volume of gas in storage at the beginning of September was 7,4% below the five-year average.
At the same time, according to the publication Argus, the supply of coal from the United States began to decline. In July, US exports fell 20,3% from June. This was influenced by limited access to finance and a shortage of labor during the pandemic.
Coal stocks are also dwindling due to stronger exports, as solid fuel prices are three times higher than a year ago. According to the calculations of the Energy Information Administration, coal reserves in the United States by the end of the year may fall to less than half of last year. Energy demand dropped last year due to the pandemic. The US economy is running at full capacity again this year. Unsurprisingly, electricity prices are already on the rise.
What is happening in Europe can be seen as a trailer for the worst that can happen in the United States. And although the United States is much more energetically independent than, say, the United Kingdom, exports nevertheless generate income, and government intervention will be required to force gas producers to reduce exports.
- says the media.
The fact cited by Reuters is alarming. Last week, such an intervention was requested by a group of manufacturing enterprises. Industrial Energy Consumers of America has asked the Department of Energy to set restrictions on LNG exports to avoid skyrocketing prices and gas shortages in the winter. LNG producers are, of course, opposed. The executive director of the LNG Center said that most of the exports are carried out under long-term, fixed-price contracts, which have nothing to do with benchmark gas prices and their changes. However, some LNG is sold on the spot market. But the fact is that gas prices are already twice as high as a year ago.
At the same time, according to Bloomberg, China is increasing its coal imports. But many power plants are short on solid fuels and this can stimulate gas consumption. This will further exacerbate the difference between global supply and demand, the media concluded.
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