Market participants speculate that oil could reach $100 a barrel in the winter and that natural gas prices, currently around $5 per MMBTU (British Therman Units), will reach double-digit values, says an analysis performed by XTB Romania, a company listed on the Warsaw Stock Exchange, according to Agerpres.
“Natural gas prices in Europe have risen by 500-600% in the last year. Coal prices around the world rose by 100-150% over the same period. US oil or natural gas did not face such a large rally, but even in these cases prices rose by several tens of percents. Where should we look for the reason for such rapid price increases?” analysts have asked.
“The easiest way to reduce costs would be to move away from fossil fuels,” the analysis said. This is easier in theory than in practice, and the process progresses slowly. Many countries have decided to switch to natural gas as a means of producing energy. It is a more expensive way, but results in 200% lower CO2 emissions and a much smaller amount of other waste. Meanwhile, countries are increasing their share of renewable energy sources to the detriment of conventional energy sources, especially to the detriment of coal. All the pieces seem to fit. Higher emission prices lead governments to favor lower-emission energy sources, such as renewable energy sources or natural gas. However, a problem arose.
The winter season 2020/2021 was a very cold one, and natural gas stocks were significantly reduced worldwide. A warm summer period followed, which generated an increased demand for natural gas, as electricity was needed for air conditioning.
”Let’s not forget the below average winds in the United Kingdom, the limited sunny period in Germany or a low water level in Norway, Italy or Spain. All these factors have limited the amount of energy produced from renewable sources. To make matters worse, Russia is the only natural gas supplier for the vast majority of European countries. The stability of this supply can be affected not only by political decisions, but also by the capacity of gas pipelines. This is, in fact, a reason for the construction of the Nord Stream 2 pipeline. The approval process for the new pipeline is still underway while the season for the recovery of natural gas deposits in Europe is already coming to an end,” it is also shown in the XTB analysis.