Europe Stocks Up on Natural Gas for Winter
After hitting a record high in August, the price of natural gas in Europe has fallen dramatically in recent weeks. This seems like good news for consumers, but experts warn that the the spot-price declines are simply a seasonal phenomenon that will be reversed as soon as the first cold days hit this winter. In fact, prices are still expected to be about seven times higher than normal levels this winter, and there are still potential concerns about an energy crisis.
For now, warm autumn temperatures and a global buying spree have allowed the European Union to build up their stocks to over 90% of capacity, a level that would have seemed impossible a few months ago. With Russia effectively cutting off their pipeline gas supply as a result of the war in Ukraine, the EU has been forced to look elsewhere in order to secure the fuel necessary to power their industries and heat their homes.
They found their answer in the form of Liquefied Natural Gas (LNG), primarily from the United States and Qatar. As Jens Sudekum, an international economics professor at the Dusseldorf Institute for Competition Economics puts it, Europe was able to make up for the lack of Russian energy by “buying the entire market” for LNG, an endeavor which contributed to the spike in prices earlier this summer.
In terms of a long term solution to the problem of dependency on Russian natural gas, there are a few options. Those concerned about the climate continue to advocate for the development of alternative energy sources, a path which is less incentivized when gas prices are low. Alternatively, many have suggested a turn towards African countries as suppliers of natural gas, including Algeria, Angola, the Republic of the Congo, and Senegal as potential sources. While securing lucrative energy deals would be a massive step forward for these African countries, this trend seems alarming to those who desire a transition into renewable energy.
However, it is important to keep in mind the double standard surrounding development that many of these countries now face. In the more climate conscious world we inhabit today, developing countries are expected to progress without using the same environmentally damaging technologies that gave their predecessors such an advantage. According to the International Energy Agency, this restriction may not be so important in the grand scheme of things; they project that if Africa developed all their known gas reserves their global emissions contribution would increase from 3% to 3.5%, paling in comparison to the emissions produced by the world’s largest economies. Going forward, European countries may be able to establish contracts with African countries in order to develop new gas fields in a move that will benefit both sides economically, although it may harm the planet in the long run.