The years of high prices are behind us. The gas market is entering a time of surpluses
After years of expensive energy, the gas market is clearly changing. Experts talk about a surplus of raw materials and predict price declines in the coming years.
After several years in which high energy prices were one of the main economic problems of many countries, the situation on the gas market is beginning to change significantly. The latest analyzes indicate that in the coming years it is not a deficit but a surplus of gas that may become the new norm. As noted by “Puls Biznesu”, such a turn may have positive consequences for the global economy.
Gas surplus
Until recently, companies in numerous industries pointed to expensive gas as a serious barrier to development. Today, it is increasingly emphasized that investments in new production capacity undertaken during the crisis are beginning to bring results in the form of a growing supply of raw materials on the market.
In recent weeks, investment banks and analytical centers have presented a series of forecasts regarding the future of the gas market. Goldman Sachs estimates that European gas prices in the TTF hub may fall from the current EUR 30 per MWh to approximately EUR 12 per MWh in 2029. Wood Mackenzie, in turn, points out that the gas surplus is already a fact, and not just a coming scenario.
Current gas prices remain susceptible to weather factors, especially winter weather in Europe. Nevertheless, in the longer term, growing supply is expected to put pressure on further price reductions.
The International Energy Agency forecasts that in the next five years the global gas surplus may reach up to 65 billion cubic meters per year. This corresponds to approximately 1.5 percent. global consumption of this raw material. Although this is not a very high share numerically, it may have a significant impact on price formation.
Price drops
Experts emphasize that demand for gas is characterized by low price elasticity, which means that price changes have a limited impact on the level of consumption. As “Puls Biznesu” explains, even a relatively small excess of supply may cause significant price drops. Similarly, in 2022, a relatively small shortage of raw materials led to a sharp increase in energy costs.
All these signals indicate that the situation on the gas market is gradually moving towards greater stabilization. The prospect of a surplus and falling prices may mean relief for both households and businesses that have hitherto been hit hard by the effects of the energy crisis.
