Global natural gas congestion consumers and industry

Much of the world’s natural gas shortages are suddenly worrying, and utility bills, closed factories, and the effects of winter are being felt.

Throughout Asia, Europe and Latin America, consumers are still reeling from the epidemic, which has quadrupled in recent months as natural gas prices soared this week. High-intensity chemicals, steel, ceramics, and other commodities are being congested and, in some cases, blocked.

Electricity prices in South Korea have risen for the first time since 2013, and small businesses that have struggled under months of pandemic laws now fear future prices. “It is already difficult for small businesses to survive,” said the Korean Micro Enterprise Federation.

The worst drought in 90 years in Brazil has forced hydroelectric power companies to import expensive natural gas. After an increase of about 8 percent in July, the government increased electricity prices by about 7 percent in September.

Europeans are also concerned. The Spanish government recently announced that it would take profits from energy companies to help pay taxpayers. In Italy, residents have recently jumped on electricity bills by almost 30 percent, increasing their gas bills by 14 percent.

“To save money, we have to do the dishes at night,” said Carla Forney, a teacher and mother of two in Bologna.

In China, the world’s largest natural gas importer, Chinese President Xi Jinping’s demand for clean-up plans to move away from coal has increased by 13 percent.

As a major gas exporter, the United States is benefiting from strong international demand. Late in recent years, rising prices have called for imports. US prices, on the other hand, are among the most recent in Europe and Asia.

Global shortcomings are linked to the growing popularity of natural gas for electricity, as it emits less greenhouse gas emissions than coal. It is being used in many countries as a viable alternative to coal-fired plants and aging nuclear generators. Energy grids expect renewable sources such as wind and solar to expand.

Reliance on gas means that in some systems, such as the winter, the capacity to store gas is sometimes reduced, especially in some countries, such as the United Kingdom.

If there was a slight drop in demand last year at the time of the outbreak, this year’s production and other activities would have been difficult for the industry to cope with, with an estimated 4 percent increase in global gas consumption.

Neil Beverge, senior analyst at Hong Kong-Burnstein Market Research Company, says that postpartum recovery is driven by “demand for goods rather than services.” That means a huge increase in the consumption of natural gas and electricity for power plants and other industries that are focused on doing things.

Natural gas tankers from exporters such as the United States, Qatar and Australia have flown to China and Brazil at high prices. That is, in some countries, when demand for oil has risen sharply, unusually low storage rates – due to the cold – have reduced supplies to troubled Europe. Increasing access to China and falling imports from Britain and the Netherlands are also tightening European markets.

High gas prices and low wind speeds, which cut off energy from wind turbines, have used coal more than coal for the first time since 2019, according to consulting firm Restad Energy.

Natural gases, like fertilizers, are severely damaged to produce ammonia, the main ingredient in soil improvements.

Tony Will, chief executive of CF Industries, one of the world’s largest fertilizer producers, said CF has tripled gas prices at two British factories this year until CF lost $ 300 per ton of ammonia.

The losses turned into “very big and negative” and the company could not proceed according to those terms, and closed both plants and made headlines across Britain.

Since then, Mr. Will has agreed to a short-term amendment: he has opened a plant with the government to cover the losses. Ammonia production is helping the British meat processing industry as well as carbon dioxide, which is helping the government pay CF bills.

CF is not the only fertilizer producer that has been beaten by rising natural gas prices. Last month, Norway’s Yara International cut off the production of ammonia in many plants, and Germany’s chemical giant BSF banned crop production due to gas prices.

Speaking by telephone from a fertilizer conference in Lisbon, Mr Will told the British government that the availability of fertilizer could be the next crisis and could endanger crops next year.

Analysts say pressure in natural gas markets is also pushing up oil prices. In some cases, oil prices have reached $ 170 per barrel, and in some industries there is a huge incentive to burn fuel (recently $ 75 to $ 80 per barrel).

Analysts say that where gas prices are going depends on the severity of the winter. A cold winter could jeopardize further shortages and industrial closures, and possibly a struggle for legislators to respond.

On the other hand, hot weather can cause prices to plummet. Future markets are set to fall sharply next spring.

“We put our industry and our families in the hands of the weather,” said Marco Alvara, CEO of a major Italian gas company.

According to climate analysts, the world may be moving towards a stronger energy and gas market in recent years. The epidemic and other factors have delayed investment in new fossil fuel projects, including liquid natural gas terminals. Over the next three years, only about a third of the additional LNG volumes will be on the market. In some countries, such as Britain, nuclear power plants have been shut down and will not be replaced.

Growing concerns about climate change could force some companies to invest in new multibillion-dollar fossil fuels, as royal courts in May ordered Royal Dutch to cut greenhouse gas emissions through shareholders or litigation.

According to Carlos Torres Diaz, head of gas and energy at Restad Energy, electricity networks are shifting energy from oil, gas and coal to clean energy, and the result could be “more volatile” markets. The challenge with young teenagers is that they depend on the sun and the wind.

Over time, huge solar and wind and other clean sources will help protect consumers from the pressures of the global commodity markets. But the events of this fall indicate that there is some distance.

Reporting by Keith Bradsher, Gaya Pianigani, Jack Nikas, Hisco Uno And John Yon.

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