Energy prices will continue to be high in the near term, according to a new forecast released by global supply chain and operations consulting firm, SGS Maine Pointe, a member of the SGS Group. The report, authored by Stephen Ottley, Senior Managing Director and Head of Chemicals & Energy, and Richard Zdunkewicz, the firm’s energy markets analyst and lead energy advisor, cites increasing demand for natural gas export as well as decreased oil and gas capital expenditures as the primary cause for near-term price inflation in all US markets. A mild winter in the U.S. and Europe have held prices at bay, but that relief is likely to be only temporary.
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Part 1 of the report, “Storm Clouds Gathering for Energy Prices,” explains how the reshuffling of the global natural gas supply, increased US exports to the EU, and an increased investment in renewables will result in higher energy prices in the US near-term. In part 2, “The US Chemical Industry, Energy Intensity, and Costs,” the authors go into additional detail about energy intensity in the petrochemical industry, and the impact energy prices will have on the industry. According to the report, higher energy costs are already having an adverse effect on chemical company earnings, although strategic management of energy can result in better cost management and lower risk.
The report takes Russian exports of LNG to the EU into account, noting that imports of Russian gas have dramatically decreased since its invasion of Ukraine and are unlikely to resume historical levels for some time. As a result, the EU will rely on LNG from the US and other global suppliers.
The SGS Maine Pointe report also considers renewable energy, noting that near markets favoring renewable power over thermal generation sources show much higher prices along with significant resiliency issues. “To effectively incorporate renewable energy into the mix, we need better grid management technologies and the ability to properly balance resources,” said Zdunkewicz. “We’re just not there yet in terms of energy storage technology.”
SOURCE: PRWeb