High gas prices should moderate in coming months

Significance

A moderate northern hemisphere winter has resulted in weaker Asian gas demand, causing spot prices of liquefied natural gas (LNG) to fall back from record highs. Strong oil and gas prices will support higher US gas production, some of which will come onto the international market as LNG from the Calcasieu Pass plant comes onstream.

Impacts

• LNG suppliers and project developers will benefit from tensions around Ukraine and the politicisation of Russian pipeline supplies.
• Tensions with Russia and the impact of high gas prices on consumers will spur renewable energy construction and electrification in Europe.
• Concern over high LNG prices in developing Asia may slow coal-to-gas switching, sustaining higher levels of greenhouse gas emissions.
• High fossil fuel prices could also set back LNG adoption and hence coal-to-gas switching in emerging Asia.