Natural gas prices are soaring. Here’s why you care.

Natural gas prices are soaring. Here’s why you care.

The world is hurtling towards a big, chilly, and expensive problem right now. And no, we're not talking about climate change (at least not directly).

Right now a surge in global energy prices — in particular for natural gas — is rattling entire industries and threatening to upend politics in many countries.

In Europe, natural gas prices have just hit all-time highs. The UK alone has seen a price surge of 500 percent over the past year. In the US, prices are as high as they've been since 2014. Asian markets are up, as well — a major gas importer in Pakistan says the current situation is "crazy."

Remind me why I care about prices for natural gas? For one thing, it keeps the lights on. Globally, it powers about a quarter of electricity generation. In Asia, it's more than 30 percent, and in Europe and the US, where natural gas is the largest single source of household heating, it's as high as 40 percent. So soaring natural gas prices can boost power bills fast. In Spain alone, higher gas prices could suck 20 billion euros ($23.37 billion) out of people's pockets.

Higher natural gas prices can also make dinner more expensive, because it's a major ingredient in the production of the fertilizers that are used to grow food crops. High gas prices have already forced two major fertilizer plants in the UK to close, driving up prices for farmers, which get passed through to the rest of us.

Why is this happening? First, demand is rising. As some economies begin to recover from COVID, there's just a lot more need for natural gas across all industries.

Second, supplies in key places are low. In Europe, for example, natural gas producers came out of a cold winter last year with less gas in storage than they usually do. Now, with demand picking up and winter looming, prices are soaring because of concerns about whether there's enough gas for this season.

Lastly, alternatives are tight. In the old days you'd just fire up an idle coal plant to produce more electricity cheaply (and dirtily). But now that climate change is forcing governments around the world to cut emissions, that's not a good option. Even in China, which is trying to wean itself off coal dependency, many people are now braving blackouts as their government fights pollution by keeping a lid on coal.

This is happening at a bad time economically — and politically. A number of major economies are already struggling with high inflation (a subject we'll dedicate more attention to in a special edition next week).

But higher energy prices will only add to those pressures in ways that could have real political consequences. Will inflation undermine US President Joe Biden's big-spending domestic agenda? How about the blowback for Prime Minister Boris Johnson in the UK, where a truck-driver shortage is already causing a broader fuel crisis that's contributed to the highest inflation uptick on record? Will power prices and inflation play into campaigns ahead of momentous presidential elections next year in both Brazil and France?

And of course there's some geopolitical intrigue: Europe and the US are already accusing Russia — a major gas exporter — of deliberately withholding supply. The Kremlin says "sorry, we're meeting our contractual obligations, what more do you want?", but Washington and Brussels think Russia is soft-pedaling gas exports in order to pressure the EU into fast-tracking approval of a controversial new Russian gas pipeline to Germany. Expect this argument to heat up as the weather cools.

Bottom line: Winter is coming, and there may not be enough gas to keep everyone well-lit and warm at prices that people and businesses can afford. If it's a cold one, grab yourself a sweater, and brace for some serious political blowback.

In a new episode of That Made All the Difference, Savita Subramanian, head of ESG Research, BofA Global Research, explains why ESG factors are critical to why some companies succeed and some fail.

"I think 10 years from now, we won't even call it 'environmental, social and governance,' or ESG investing. We won't call it sustainable. It'll just be part of investing," she says.

Link to the episode here.

Less than a year after the world started putting COVID vaccines into people's arms, most regions have immunized at least half their populations, but Africa still lags behind. With industrialized nations hoarding jabs and the COVAX facility faltering, barely five percent of the African population is fully vaccinated.

Some enterprising South African scientists are now making a bold bid to change that, with an experiment that could benefit not only Africa's 54 nations and billion people, but the entire world: Afrigen Biologics and Vaccines, a Cape Town-based startup, has developed a plan to reverse-engineer Moderna's mRNA shot and manufacture it for priority distribution on the continent.

More Show less

Right now, only one region of the world is reporting an increase in new daily COVID cases. Here's a hint: it's one of the places where vaccines are, for the most part, easiest to get.

It's Europe. According to the World Health Organization, the region last week notched a 7 percent uptick in new daily infections, the third week in a row that infections rose there.

More Show less

Jon Lieber, head of Eurasia Group's coverage of political and policy developments in Washington, shares insights on US politics:

How are Democrats going to finance their $2 trillion spending bill?

Well, I don't know. And the Democrats don't know either. The original idea was to undo a lot of the Trump tax cuts from 2017. This is a very unpopular tax bill that every Democrat voted against, but moderate Senator Kyrsten Sinema told the White House earlier this month that she's against any and all tax rate increases. This takes the top individual income tax rate going up off the table. And it takes the top corporate rate going up off the table. And it probably takes capital gains rates going up off the table. So, now the Democrats are scrambling to backfill that revenue that they can no longer raise through rate increases with other ideas. One of those ideas is a tax on the unrealized gains of billionaires.

More Show less

The US is the world's largest economy. It's also the only one among the top 10 that has no national paid parental leave scheme. If you or your partner have a baby in the US the message is clear: you're on your own. Compare that to many European countries, which offer cushy paid leave schemes for new parents – more generously for women. Even countries that don't have a robust social safety net offer paid parental leave in some form. We take a look at how the US stacks up on paid parental leave (or lack thereof) compared to the world's largest economies.

From overall health and wellness to representation in the global workforce, women and girls have faced serious setbacks over the past 18+ months. They also hold the key to more robust and inclusive growth in the months and years ahead: McKinsey & Company estimates that centering recovery efforts on women could contribute $13 trillion to global GDP by 2030.

On October 28th at 12pm ET, as part of our "Measuring What Matters" series, GZERO Media and the Bill & Melinda Gates Foundation will look beyond traditional indicators of economic recovery to examine COVID-19's impact on girls and women, specifically in the areas of health and employment.

More Show less

How can we go from "fine words" to "fine deeds" at the upcoming COP26 climate summit in Glasgow? For Inger Andersen, head of the UN Environment Program, it's actually quite simple. The world's top 20 economies, she says, are responsible for over three-quarters of global carbon emissions, so if they "make the requisite shifts, frankly we are out of the climate crisis." Watch her interview with Ian Bremmer on the upcoming episode of GZERO World.

On 30-31 October, the world's top leaders will gather in Rome for this year's G-20 Summit. After the pandemic forced them to meet last year by videoconference, the heads of state will once again be attending in person, allowing for the type of parallel, one-on-one meetings that have proven more productive in the past. Still, many critics of the G-20 have come to see the forum as a talk shop, a place where a lot is said but nothing really happens. Will this year be any different, given the long list of challenges the world faces, from COVID to climate change? We talked with Eurasia Group expert Charles Dunst to set the stage and find out where things are going.

More Show less

Subscribe to GZERO Media's newsletter, Signal


Subscribe to GZERO Media's newsletter: Signal


Subscribe to GZERO Media's newsletter: Signal