The UK is trying to ensure households and businesses have enough energy this winter by turning to international markets buoyed by booming US liquefied natural gas (LNG) supply, and reinstating retired storage capabilities. But the impact of Russia’s recent decision to switch off its Nord Stream 1 pipeline has proven that European countries are still very much at the mercy of changes in global gas market supply and demand.
Such events are likely to continue to cause gas price volatility until more supply is available, which could take at least three years. Indeed, a recent dip in European gas prices is likely to be temporary.
Avoiding a significant gas supply emergency this winter will require the continued flow of some Russian gas to Europe, lower-than-average Asian demand for LNG, and mild weather. But prices will also depend on how European neighbours respond to any emergency.
