Who wins in the rush for natural gas?
TEXT OF STORY
Steve Chiotakis: Not long ago the demand for natural gas outstripped supply. But the recession took care of that. Next week the International Energy Agency releases its World Energy Outlook, and a rush of natural gas is on the agenda. Ashley Milne Tyte reports.
Ashley Milne-Tyte: In the U.S. and northern Europe, the law of supply and demand rules. A gas surplus means producers get lower prices.
Nikos Tsafos is a senior analyst with PFC Energy. He says for buyers, it’s another matter.
Nikos Tsafos: People that use gas for power, or for industry, if they can access competitive gas, they’re winners. And especially they are winners if they can use this natural gas in order to replace oil.
Because it’s cheaper than oil to begin with. But not all producers lose out when there’s a glut of gas. He says in Asia and continental Europe, the price of natural gas is linked to the price of oil, trailing it slightly.
Tsafos: So given the fact that you had a rebound in oil prices in 2009, that has actually also brought up gas prices.
Tsafos says look ahead ten years or so and there’s likely to be a supply squeeze. By then, he says, gas will be in high demand as a cleaner alternative in the transition to renewable energy.
I’m Ashley Milne-Tyte for Marketplace.
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