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EXPENSE REPORT

Europe’s thirst for gas could shock energy prices in Asia

Natural gas flares off at a production facility owned by Exxon near Carlsbad, New Mexico.
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  • Samanth Subramanian
By Samanth Subramanian

Looking into the Future of Capitalism

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In an effort to wean Europe off Russian energy, the US is preparing to sell more of its own liquiefied natural gas (LNG) to European countries. Europe will buy 37 billion cubic meters of LNG this year, compared to 22 billion last year.

Prices of gas in Europe are already high, soaring to 18 times last year’s levels in early March. The countries that will really feel a fresh squeeze in prices lie in Asia, because they were less dependent on Russian energy supplies and because they will now vie with Europe for a limited pool of US LNG. This is especially so because, as Quartz found, the US is already exporting all the LNG it can pump. South Korea, Japan, and India are among the top 10 purchasers of US LNG exports, according to the US Department of Energy. Eight countries in east Asia and the Pacific bought nearly 40% of US exports between 2016 and 2021; European and central Asian nations together accounted for 30%.

Should Asian countries find themselves paying more for gas, it will neatly reverse a situation that prevailed last year, when Asian countries—particularly those trying to get off coal—fiercely competed with Europe on the gas market. The result was a surge in the cost of gas for Europe, but also, more profoundly, a reminder of the limited nature of energy supplies, and of the whipsawing effects on prices when supply runs short and demand long.

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