By Arthur Chen      攝影師：Pixabay

The conflict between petrochemical energy and environmental protection has conflict. Large amount of natural gas be used for power generation. The imbalance between supply and demand is an issue that European countries must resolve.   

This year is not a peaceful year. Just last Monday, peoples were concerned about the sudden arrival of Chinese new violent industrial power rationing measures. China, a major producer, is tantamount to freezing the supply end in an instant. The impact it brings on the demand end is still not visible, but many importers and even shipping lines have had to consider the next response. Coincidentally, electricity problems have also occurred in Europe these days. The reason comes from the soaring price of natural gas. This has become a hot topic in Europe and even the world. Since the beginning of the year, European electricity prices have continued to rise sharply, and electricity prices in major EU economies have generally more than doubled from a year ago. In addition, as the northern hemisphere gradually enters autumn and winter, the demand end has grown more than the supply end, and European electricity prices have more room to rise.

Because of the environmental protection advocates, European developed countries put forward the carbon reduction vision early to reduce the use of coal for power generation, and turn to other environmentally friendly energy sources to mainly use natural gas, coupled with auxiliary other renewable energy sources. However, due to extreme weather, the power generation of wind, water, and solar power in many European and American countries has fallen sharply. This led to a surge in demand for alternative thermal power generation, which led to soaring natural gas prices. Looking at September this year, the price of electricity in the UK was almost 7 times that of the same period last year. The Bank of England pointed out that due to the impact of energy prices, it is expected that by the end of 2021, the UK inflation rate will exceed 4%, which is equivalent to twice the set basic inflation rate of 2%. And the shortage of natural gas will harm the cost of the British food industry. This will further increase people's perception of rising prices.

Just in mid-September, the price of natural gas at the Dutch TTF center has risen to 71.00 euros/MWh, an increase of 72% from the previous month, and since January, the price of natural gas has risen by more than 250%. It had to arouse tensions among relevant government departments. Goldman Sachs also predicted in the latest report that the tight supply and demand of natural gas in Europe may intensify in the next few months, and Europe will face the risk of power outages. The soaring price of natural gas has become a problem that annoy Europe and the world. The current European "natural gas crisis" is mainly affected by the "simultaneous influence" on both sides of supply and demand. On the demand end, the global economic restart after the covid pandemic has pushed up the demand for natural gas. Since the end of last year, strong demand for electricity across Asia has driven liquefied natural gas (LNG) imports far higher than the previous normal level. As Asian countries implement more environmentally friendly energy policies, natural gas with less pollution has become the first choice to replace coal. This directly leads Europe to compete with Asia for LNG imports. On the supply end, the particularly cold winter in Europe last year meant that Europe consumed more natural gas reserves than usual. But the summer reserves did not come to be replenished in time. The main reason is that the production of natural gas in different regions of the world has also been disturbed by politics and logistics. The total amount of Russian natural gas flowing into Europe is declining, making the already tight market even more tense. On the other hand, the export of LNG from the United States is restricted. The United States is an important source of natural gas supply to Europe, but because of the impact of Hurricane Ida in early September, natural gas production has fallen sharply. The price of natural gas futures has been at its highest level in more than seven years.

According to data, after Hurricane Ida, it is estimated that 43.6% of oil production capacity and 51.6% of natural gas production capacity in the Gulf of Mexico are still closed. While Hurricane Ida’s blow to the Gulf of Mexico’s oil and gas production has not yet recovered, tropical storm “Nicholas” has formed in the southern Gulf of Mexico and may once again disrupt natural gas production in the region. The United States is the world’s third-largest exporter of LNG, accounting for 10-15% of global LNG exports. The decline in production has significantly affected the supply of natural gas in Europe and Asia. Insufficient power generation from renewable energy sources such as wind power has also indirectly pushed up European natural gas prices. The European market can only expect the opening of the Nord stream 2 pipeline, which will increase the supply of natural gas, but the formal commissioning process may take more than 4 months. In other words, this winter Europe will face the double "severe winter" impact of climate and natural gas prices.

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