Driving Force In New Cold War: 700% Costlier Gas

The steep rise in gas prices in Europe since the start of last year is pushing the continent to the brink of recession

One morning in early June, a fire broke out at an obscure facility in Texas that takes natural gas from US shale basins, chills it into a liquid and ships it overseas. It was extinguished in 40 minutes or so. No one was injured.

It sounds like a story for the local press, at most except that more than three weeks later, financial and political shockwaves are still reverberating across Europe, Asia and beyond.

That's because natural gas is the hottest commodity in the world right now. It's a key driver of global inflation, posting price jumps that are extreme even by the standards of today's turbulent markets - some 700 per cent in Europe since the start of last year, pushing the continent to the brink of recession. It's at the heart of a dawning era of confrontation between the great powers, one so intense that in capitals across the West, plans to fight climate change are getting relegated to the back-burner.

In short, natural gas now rivals oil as the fuel that shapes geopolitics. And there isn't enough of it to go around.

It's the war in Ukraine that catalysed the gas crisis to a new level, by taking out a crucial chunk of supply. Russia is cutting back on pipeline deliveries to Europe - which says it wants to stop buying from Moscow anyway, if not quite yet. The scramble to fill that gap is turning into a worldwide stampede, as countries race to secure scarce cargoes of liquefied natural gas ahead of the northern-hemisphere winter.

The new oil?