Energy prices are expected to continue climbing due to the high demand amid supply constraints which could drive global inflation higher, Bloomberg reported.
- The International Energy Agency expects demand to jump 7% in 2024 versus pre-COVID-19 levels, while McKinsey & Co. predicts demand for liquefied natural gas to grow 3.4% annually until 2035.
- Natural gas rates in Europe have soared over 1,000% from the record low in May 2020, while liquefied natural gas rates in Asia have climbed by over six times in the last year. US prices have also posted decade-highs.
- Higher natural gas prices would impact power factories and make petrochemical production costlier. This could translate into higher monthly bills for gas and energy for consumers.
- Analysts believe that prices will not be high enough to have a significant impact on demand, especially in emerging economies with policy support.
With countries seeking to reduce carbon emissions and gas being the transition fuel, prices are likely to stay elevated over the medium term and even rise further in the longer term.