Gas price collapse follows supply glut
The surging global supply of natural gas threatens to keep prices depressed in the short and medium term, according to the Investment Strategy Team for Private Banking at Lombard Odier.
In large part this is because the process of ‘fracking’ – or fracturing rock underground – has allowed an unprecedented surge in natural gas supply from the US, leading to a collapse in prices, a report by Investment Stratagy Group has said.
Stephanie Kretz, member of the Investment Strategy Team for Private Banking at Lombard Odier, argues that although the long term demand for natural gas will increase considerably, the increase in supply means that there is unlikely to be a price rise in the short and medium terms. The Investment Strategy Team believes gas demand will increase 2% annually against the 1.2% growth in demand for energy overall.
Kretz said: “According to the International Energy Agency, the US will be the second-largest producer in 2035, with unconventional gas representing the bulk of the output. This means the eventual attainment of complete [energy] autonomy.”
At the same time the continuing low cost of gas will reduce inflation pressure and grow the local economy, reducing unemployment.