Falklands : Natural Gas - Will Declining Demand Bring Prices Down Further?
Submitted by Falkland Islands News Network (Juanita Brock) 24.12.2008 (Article Archived on 07.01.2009)
Various news agencies report that Russia's Prime Minister, Vladimir Putin, said on Tuesday that the world financial crisis and rising costs will result in increasing prices.
NATURAL GAS – WILL DECLINING DEMAND BRING PRICES DOWN FURTHER?
By J. Brock (FINN)
Various news agencies report that Russia's Prime Minister, Vladimir Putin, said on Tuesday that the world financial crisis and rising costs will result in increasing prices. Mr Putin spoke at a meeting of the Gas Exporting Countries Forum, a dozen leading natural gas exporters who convened in Moscow to strengthen co-operation.
“Costs of exploration, gas production and transportation are going up”, he said, “it means the industry's development costs will skyrocket. The time of cheap energy resources like cheap gas is surely coming to an end.”
Like those in the rest of the world, Russia's economy is suffering as crude oil prices — an essential element of its economy — have declined significantly since reaching a high of around $147.00 in July.
HDR agrees that it is more expensive to extract natural gas from remote places but it is also true that in these difficult financial times fewer people will be able to afford that natural gas. Yes, go out and get the resource but don’t expect poor people to pay for it like they used to.
We all witnessed the chaos high crude prices caused in the economy with airlines raising prices to cover fuel costs and the auto industry having to produce more energy friendly vehicles.
Natural gas was looked on as a viable alternative for people who could not afford diesel or kero to heat their homes. It was used in vehicles to offset rising gasoline prices. Municipalities had depended on it and hoped to use it for extended periods of time as the excellent alternative to pain at the pump.
Rising natural gas prices will mean that even more homes will be cold this winter when rising costs become impossible to pay. Demand will go down and, like in the crude industry, people will cut production in hopes of rising the price, only to fuel more downward trends.
If the Gas Exporting Countries Forum wants ti increase business and really make a profit they should consider lowering the price so that more people can afford natural gas. Increasing the price means cold people and lots in storage that nobody can buy.
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