Wishful thinking: drop in oil price amidst exponential rise in gas prices
The price of LNG, liquified natural gas, has risen exponentially this month and has hit above $9 in early trading on Thursday, raising the spectre of economic gloom by a few more notches.
In the middle of a rise in price of this kind in a major commodity, it is unthinkable that the price of crude oil is going to come down - in the near future; it's at best wishful thinking and at worst, just delusional - plain and simple.
The West has exhausted every feasible strategy to get the OPEC to increase the output in order to bring the crude oil price down; the latter are in no mood to succumb to pressure, citing the issues related to infrastructure; When the latter, more or less, is at a proxy war with a key member of the OPEC+, Russia, the room for a wriggling is getting smaller by the every passing day.
It is clear now that the West has given up on making appeals to the OPEC; instead, the individual countries come up with their own measures to mitigate the crises that stem from the high energy costs.
In the United Kingdom, for instance, the government announced a package of £10 billion on Wednesday in order to ease the burden of the consumers, encompassing every household; it plans to impose a windfall tax on the energy firms to get the money, despite the growing resistance from the sector.
How energy firms are going to respond to it, remains to be seen; they may resort to increasing the prices at pumps - in return.
In the European Union, meanwhile, the issue of banning Russian gas has created a serious rift - and it is widening in proportion to the frustration of consumers.
Hungary, for instance, is vehemently opposing it and there is a growing chorus in the bloc that clearly resonates with the former.
The rise in price of LNG indicates that the West has not found an alternative for Russian gas, echoing what Qatar said months ago. There is clearly not enough gas in the markets to meet the demand - and in the middle of summer in the northern hemisphere.
Even before the war broke out between the Ukraine and Russia, the West tried it best to bring the prices of oil and gas down, but to no avail. During the war, quite understandably, the situation got worse.
Although there attempts were made to revive the JCPOA, 2015 Iranian nuclear deal and getting Venezuelan oil into the markets, they have stalled on their respective tracks, after initial hype.
Having exhausted the diplomatic tools at its disposal to bring down the prices of oil and gas, the US is determined to go for the nuclear option; the NOPEC bill that grab headlines these days may be the first in a series of steps to hold oil produces accountable for manipulation of the energy markets by massaging the supply-demand equation.
