Oct 5, 2021 - Energy & Environment

Global energy crunch pushes prices up in U.S., Europe

Illustration of an oil barrel with a flower made of cash growing out of it.
Illustration: Aïda Amer/Axios

European natural gas prices soared to fresh records this morning while U.S. oil prices are at seven-year highs, the latest signs of convulsions in the global energy system that could shake climate policies.

By the numbers: Via Bloomberg, benchmark Dutch gas futures rose another 18% in trading today, with British prices seeing a similar bounce.

  • Brent crude oil prices are trading at over $82-per-barrel this morning, the highest since 2018, while the U.S. benchmark WTI is at a seven-year high above $78.
  • U.S. gasoline prices are averaging $3.20-per-gallon, per AAA, over $1 higher than a year ago.
  • Reuters reports that European coal futures were trading at 13-year highs yesterday "as rallying gas prices and strong Asian demand fuelled coal buying."

The intrigue: The trends are interlocking, so the high natural gas prices are prompting upward pressure on oil demand as power companies change fuels.

  • Saudi Aramco CEO Amin Nasser said yesterday he sees fuel switching adding 500,000 barrels per day to global demand.
  • JPMorgan estimates it could add 750,000 barrels this winter, per the WSJ.

The big picture: The commodity surge stems from a suite of overlapping forces — including weather and demand revival from the pandemic — that are now being felt worldwide.

Energy supply problems are also apparent, with Bloomberg reporting that coal-fired power plants in India are low on supplies and China also facing a crunch.

What we're watching: The potential policy fallout. "Soaring gas and power prices are prompting fears of a backlash against the EU's Green Deal policies, highlighted during Monday's eurozone finance ministers' meeting," Politico reports.

Go deeper: What's behind the rising energy prices

Go deeper