LONDON – A huge increase in natural gas supplies combined with policies to cut carbon emissions are set to keep natural gas prices low in the coming decades, according to a draft International Energy Agency report obtained by the Financial Times.
If the forecast in the IEA’s annual World Energy Outlook proves accurate, it would mark a dramatic and rapid reversal in the natural gas sector, which just a year ago saw prices hit a record high amid warnings of supply shortages.
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Since then, vast new supplies have been discovered in the United States just as additional capacity has been added elsewhere, pushing prices down by more than half.
The “global gas markets have evolved from a seller’s market, driven by tight supply and demand, to a buyer’s market as demand weakens while new supply comes on stream,” the FT quotes the report as saying. “This looming glut could have far-reaching effects on gas pricing.”
Furthermore, the global push to limit greenhouse-gas emissions and switch to renewable-energy sources could cause demand for natural gas to peak in the early 2020s, according to the report.
“Measures to encourage energy savings, improved efficiency and low-carbon technologies reduce gas demand, more than offsetting the enhanced competitiveness of gas against coal and oil,” the report’s authors write.
The IEA declined to comment in advance of the World Energy Outlook’s release next Tuesday.
