Switching to an alternative fuel to gas is a much more difficult challenge than not using gasoline.
Recently, gas prices have skyrocketed. One of the reasons for this phenomenon is that gas is the easiest alternative to coal in the context of countries under a lot of pressure to cut emissions, which in the case of China. National is to fulfill the promise of “blue sky”.
Unlike oil, which fuels transportation vehicles, gas provides electricity—including lighting and heating fuel for schools, businesses, and nearly 40% of homes in the United States. .
Moreover, electricity is also becoming an alternative to gasoline. So, if before we said we depend on gas, now we are “super dependent” on this fuel. Gas powers about 40% of power stations in the US. In addition, the trend of switching to electric vehicles will also increase the demand for gas, which in turn reduces the demand for oil.
Think of the huge global impact! According to data updated to August, nearly 20% of cars sold in China are electric. In Germany, the rate is up to 29% (including hybrid cars).
The demand for oil will peak before the demand for gas peaks, and oil is much easier to replace than gas. In the US, all you need to do is switch to an electric car and your family’s need for gas will almost completely disappear overnight (except for a little gas for the lawn mower). !). That is why oil traders like Piere Andurand predict oil demand will peak around 2027, or even earlier.
Currently, oil prices have returned to around 80 USD/barrel. The last time the price hit such a high was in late 2014. Exxon Mobil was one of the largest companies by market capitalization in the world, with shares trading at $90 per share. Today, Exxon stock is around $60. Exxon is excluded from the Dow Jones Industrial Average, with a market capitalization of only a third of Tesla.
Switching to an alternative fuel to gas is a much more difficult challenge than not using gasoline. Type on Google the keyword “how to replace gas heating”. You’ll have a few options like using an electric heat pump water heater, but this isn’t feasible for most homes in the US. Even though renewable sources of energy are becoming more common, America will still have to depend on gas for a long time to come.
The situation in Europe is even worse. Gas production has plummeted, nuclear power plants have been closed, leaving Europe ultimately dependent on German gas pipelines or fiercely competing for barrels of gasification. imported liquid (LNG).
Russia foresaw all of this. Having seen its geopolitical power eroded by a sharp drop in demand for oil, Russia has quickly become the world’s leading gas supplier and is now an important supplier to Europe. Immediately after Russia announced it would intervene to stabilize the market, gas prices in Europe turned back sharply after several days of soaring.
And in the longer term, the United States – which is one of the top four gas producers in the world (along with Russia, Qatar and Australia) – should also jump in and fill the supply gap. During the past decade, gas prices have been inexplicably low. Although it has doubled from a year ago, the price of gas produced by the US is still a fraction of what Europe is paying. The US GDP and trade balance will benefit greatly from the soaring world demand for LNG.
America will be in real trouble if both investors and policymakers turn away from LNG production. This winter, the story will become clearer than ever.
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