Fossil fuel prices will continue to rise due to the imbalance between supply and demand

• The energy crisis in East and West ……. Is it localized or real?
• China and future oil and gas supplies and growing gas market and demand exceed supply.
• The price of gas reaches 35 $ / mmBtu, which is equivalent to an increase of 300% or $ 177 per barrel

A suffocating energy crisis in Europe and blackouts in some Chinese cities, and power cuts in California before that and in Britain suffering from a shortage of electricity supply and a sharp rise in Electricity, gas and coal prices, followed by the disappearance of gasoline from many stations have recently been some of the highlights of the global energy scene.
Data shows that over 50% of off-highway stations in Britain do not have gasoline, and around a third of BP stations do not have gasoline.
China has started to organize power cuts in cities and forced factories to cut back on their activities, in an attempt to ease the pressure on various energy sources, so that their prices do not continue to rise.
The United States is experiencing a significant increase in gasoline prices due to Hurricane Ida in the Gulf of Mexico.
Local industries that have nothing to do with OPEC countries are suffering.
Regarding the increase in the price of gas, it has nothing to do with producing countries, and one of the most important reasons is the carbon neutrality policies which are quickly applied without looking at their effects on the ground.
Coal and nuclear power are being phased out and replaced by solar and wind power in quite a surprising way.
Since coal and nuclear power have been phased out or reduced, the alternative is mainly gas, and with the recovery of the economies of European countries in recent months, the demand for gas has increased dramatically, so its prices have increased. also increased.
And with the rise in gas prices, they have turned to other sources of energy, such as coal. And its prices have also increased, and in the face of this increase, some power companies have gone bankrupt.
As for the Asian market, since the Chinese market recovered from the Coronavirus before the others due to its early infection, it resumed a normal life earlier than the others, and the demand for liquefied gas has increased.
Due to the economic recovery and the approaching winter, oil prices have exceeded the level desired by China, so Beijing has used various means to reduce the prices of energy sources, including the rationalization of consumption which ensures power cuts, and the use of strategic oil reserves that were previously bought at low prices.
The gasoline crisis in Great Britain has nothing to do with the OPEC + countries. This is because of the lack of sufficient numbers of tanker drivers to distribute gasoline across the country. But this is not the only reason for the suffocating crisis in the country.
What exacerbated the crisis were media reports of the lack of gasoline at some stations, which caused fear among people, leading to panic in the purchase and storage of gasoline.
Record LNG prices trading at over $ 34.40 per million UK thermal units with expectations of a cold winter in North Asia and strong demand from other markets, especially Europe, widen the gap between supply and demand.
The sharp rise in prices on the spot market follows an order from Beijing to energy suppliers to guarantee gas for the winter at all costs.
Bloomberg, citing anonymous sources, reported that Vice Premier Han Zheng has ordered all electric utilities to ensure they have an adequate supply of raw materials, including coal and gas. oil, to guarantee the electricity supply during the cold season, no matter what.
This means that the prices of all fossil fuels will continue to rise, exacerbating an already difficult situation in Europe as it reduces the availability of LNG for the continent.
Unfortunately for Europeans, this can also constrain pipeline supplies; China has announced online gas auctions for pipelines, which means Russia could move more gas east.
It’s hard to believe that just 18 months ago, the LNG market in Asia was posting record prices below $ 2 / mmBtu. And if we see significant purchases from China, it will put more pressure on the European natural gas market.
The strength of the gas market continues to support oil prices, and Asian spot LNG is trading at an oil equivalent of around $ 177 per barrel, so there is a clear incentive to switch from fossil fuels to gas, confirming also signs of rising oil prices. .
The bottom line is that the energy crisis in Europe was made by politicians and the International Energy Agency, which on the ground turned into the “International Environment Agency”.
And as I mentioned in previous articles, gas will be the most demanded and preferred fuel and also the future source of energy.

* Saad Abdulla al-Kuwari is an oil and gas expert and explores the future of energy.

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