Gap between world gas prices is closing

The existing gap between the price of gas in the three main regions of trading – Europe, Asia and the USA – is narrowing, a report claimed today. Gas prices […]

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By Vicky Ellis

The existing gap between the price of gas in the three main regions of trading – Europe, Asia and the USA – is narrowing, a report claimed today.

Gas prices in the US have fallen in the last decade while in Asia they have tripled and are now the highest in the world. Meanwhile Europe’s gas prices, partially linked to the price of oil, have roughly doubled.

But the Atradius Gas Market Outlook suggests a trend of “divergent” gas prices will reverse, partly because of the shale gas revolution in the United States and “strong growth” in international trade of liquefied gas.

John Lorie, Chief Economist for Atradius said: “The shale gas revolution in the US, LNG trade growth and demand surge in Asia are key forces at work. We think US gas prices will gradually climb and Asian prices will remain at current levels. And with some upward pressure on European prices, we see prices in these regions inevitably coming closer, reversing the trend of the past decade and clearly, rising across the board.

“Over time we expect the cheap energy advantage currently enjoyed by US industry to disappear and that helps restore the competitive position of European industry. Dependence on Russian gas, moreover, will diminish.”