RE: KIST17 Aug 2022 11:41
Gas prices are generally at their lowest in the months of July/August and typically at their highest at the end of December/January, trending throughout
To see gas at record highs in July/August is for lack of a better word... very usual , unprecedented actually
What is causing gas prices to skyrocket?
Pent up demand post covid lockdowns, a rush to manufacture and create - remember, energy in energy out, to make or create anything you need energy, in the past this was once wood, then coal, oil and now natural gas - each more powerful per cubic metre than the last, you need acres of woods vs tons of coal vs some barrels of oil vs a barrel of gas
For an economy to thrive, it needs energy - energy is used to manufacture, to grow food, to heat homes and fuel transportation, without energy there is no economy
This is why a gas crisis quickly leads to an economic crisis and worse, a food crisis
However, there are more events impacting Europe
Russia had three pipelines supplying Europe (Germany mostly) with naturgal gas, two are gone and the one that is left is operating at about 17-20% capacity - Germany received over 40% of it gas from Russia
Also, over the last few years there has been a war on nuclear power and anything that isn't green, with many nuclear plants scheduled to close this year (and in previous years - worsening the crisis)
What do you do when you dont have natgas? you need to import it AKA LNG (liquified natural gas) however, in this market you are competing with Asia and the rest of the world, who are also experiencing high gas prices, a food crisis and inflation, they want to fuel their economies as well
And finally, climate change
Heatwaves or extreme cold cause gas demand to rise - however, what also happens when you cant get access to natural gas? you need oil and coal (urgh coal) which is what the europeans are doing - however to use coal you need to transport millions of tonnes of it - usually by train or barge
Well the water levels are dropping due to extreme heatwaves, so many barges now cannot transport the coal (eek!)
Also, heatwaves cause river temperatures to rise which makes cooling nuclear reactors much more difficult, further impacting power generation
So its not just the war, its everything from covid, to climate change, to cutting back on nuclear/going green, to the war in ukraine, to an east vs west divide, a global scramble for LNG, inflation etc.
All connected to create the current 'energy crisis' - what people dont always link is that an energy crisis really is the same thing as an 'everything crisis'
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