Why such high gas prices

Good Subscriber Account active since Shortcuts. Account icon An icon in the shape of a person's head and shoulders. It often indicates a user profile. Log out. US Markets Loading H M S In the news. Andy Kiersz. Gas prices in the US have hit a seven-year high. Demand has increased as the economy reopened and Americans have begun driving more.

Get a daily selection of our top stories based on your reading preferences. Loading Something is loading. Email address. Sign up for notifications from Insider! Stay up to date with what you want to know. International gas prices have experienced a roller coaster ride in the past year, from historic lows to unprecedented highs.

In this OIES Comment, we analyse the drivers behind this pricing fluctuation, and offer an outlook for the coming winter. In order to avoid the distorting effects of the COVID pandemic in , we compare the year to date January-August with the same period in On the global LNG market, the supply-side increase in nameplate export capacity was offset by outages at a number of export plants.

By contrast, LNG demand outside Europe surged. High gas prices will only exacerbate elevated inflation, squeeze the budgets of American families and hurt President Joe Biden's political fortunes. Read More. Unfortunately, prices at the pump may get lifted even higher by the global energy crisis. Natural gas prices have skyrocketed so much , especially in Europe and Asia, that power plants and factories may increasingly turn to a relatively cheaper fuel source for electricity: crude oil.

The Wall Street bank cited "price contagion this winter" and the expected switching of power plants away from sky-high natural gas to oil. Citi added that a "very cold winter" could see Europe "running out of gas" by February. Oil has long been there as a potential substitute for natural gas -- except until recently, it didn't make any financial sense. That's because for much of the past dozen years, natural gas prices have been very low, making switching to oil uneconomical.

A global energy crisis is coming. There's no quick fix. That in turn would cause more sticker shock for American drivers because gas prices are priced off Brent crude. Record coal prices in China. It's not just high natural gas prices that are playing a role here. Chinese coal prices have hit record highs amid flooding in northern China that forced the closure of dozens of coal mines. Coal remains the main source of energy in China, used for heating, power generation and steelmaking.