When the covid pandemic struck and lockdown constrained demand, much of the excess gas went into storage in Europe.
In 2019 there was plenty of gas on the international market, thanks to new LNG plants coming online in America (see chart). The shortfall has taken almost everyone by surprise. And subdued investment in fossil fuels may mean higher volatility is here to stay. Viewed from a different perspective, however, its causes are simple: an energy market with only thin safety buffers has become acutely sensitive to disruptions. In one sense the crisis has fiendishly complex causes, with a mosaic of factors from geopolitics to precautionary hoarding in Asia sending prices higher. Even in America, the world's biggest natural-gas producer, lobby groups are calling on the government to limit exports of liquefied natural gas (LNG), the price of which has climbed to $25 per million British thermal units (mBTU), up by two-thirds in the past month. One trader says it is like the global financial crisis for commodities. Economist: Factories are being temporarily switched off, from aluminium smelters in Mexico to fertiliser plants in Britain. In many countries, including Britain and Spain, governments are rushing through emergency measures to protect consumers. Prices of power in Germany and France have soared by around 40% in the past two weeks. Across the world, a natural-gas shortage is starting to bite.
