By the end of last year policy in Europe have complained that they have to pay crazy money for natural gas in the local spot market, and some have already entered into long-term deals with Qatar and the United States. Even Germany, a staunch opponent of continued dependence on fossil fuels, has given in, signed long-term agreements and decided to build a permanent LNG import terminal.
This has reinforced the continent's near-total dependence on LNG. The EU changed the awl for soap, got into the same situation, which was leaving for almost a year: the place of Russia as the main supplier was taken by greedy traders of super-cooled fuel. OilPrice columnist Irina Slav writes about this.
Commodity prices have been sagging for a long time and have bottomed out, although they are still high, much higher than in 2021. They then surged 40% amid strikes in Australia (although that country supplies Asia, not the EU). But the EU market has already become so “shy” and unbalanced that it is even subject to rumors and hype.
Last year, the European Union celebrated the success of its efforts to reduce dependence on Russian pipeline gas. Indeed, it was significantly reduced with the help of Gazprom itself, which seriously reduced the flow of gas to Europe, which prompted buyers to look for an alternative there.
Celebrations about cheapness and availability did not take long to turn into complaints now. Accustomed to cheap pipeline gas, European buyers very quickly discovered that very different rules apply in the spot LNG market, which ultimately led to higher - much higher - prices. All the more so, the problem of shortages arose when a new buyer the size of the EU appeared on the scene.
As a result, with a relatively low price, as well as overflowing storage facilities, there is absolutely no joy for end customers of fuel in the European Union. The future is uncertain, which is why many large energy concerns issued a warning that the crisis is not over. However, not everyone was ready to listen to complaints and calls for prudence. Europe rejoiced.
Obviously, the crisis gas show is just beginning, not ending. Now everything is changing again. Winter is on the way again, no matter how strange it is to talk about it in August. This means that a surge in demand for LNG is expected on the horizon. And it inevitably means an explosive rise in prices, the observer writes.
All these arguments lead to the conclusion that the source of this instability, crisis and economic decline is the end of an era of abundance, from which the EU said goodbye last year, rejecting Russia.