Essay by Eric Worrall
h/t resource type; Next time you pay your gas bill, the bill could be higher due to China’s geopolitical games. Only the election of pro-fossil fuel western governments can fix this situation.
China is taking control of LNG as global demand booms
Mon, February 20, 2023 at 8:00 GMT+10
(Bloomberg) — A rush by China to sign new long-term liquefied natural gas deals promises to give the nation even more control of the world market at a time when competition for cargoes is booming.
Chinese companies complete the most LNG purchase contracts of any nation and are increasingly becoming the industry’s most important import intermediary. Chinese buyers resell many of the shipments to the highest bidders in Europe and Asia, effectively taking control of a hefty chunk of supply.
China-based companies account for about 15% of all contracts that will start supplying LNG by 2027, according to an analysis of BloombergNEF data. This trend will only increase as companies look to enter into longer-term agreements that will effectively give their dealers fuel control for decades.
The Asian nation’s market position could be a double-edged sword: China can offer stability in times of global shortages, but it could hold back supply and spike prices if demand needs to be met domestically.
Read more: https://finance.yahoo.com/news/china-taking-control-lng-global-220000960.html?guccounter=1
Thanks to the mindless Western push for Net Zero, China is increasingly able to impose a Chinese tax on all of the world’s energy supply, or keep the gas for itself if it chooses.
If the Chinese want to move into the middle to make a profit by reselling the gas, their positioning makes sense. Man-in-the-middle, cornering the market and then pumping up prices is an old trick that only works when there’s a limited supply of something people can’t live without.
The obvious counter-strategy to China making itself the world’s natural gas broker and potentially making a fat profit out of everyone’s gas bills by driving up the price is to break China’s monopoly by injecting western markets with increased domestic power Gas production flooded.
But my proposed counter-strategy would require a rational Western policy response to energy shortages.
After watching the energy policy madness of the past decade, people operating out of China seem to have reasonably concluded that Western politicians will not respond intelligently to their geopolitical games and have bet their fortunes that Net Zero-obsessed western politicians maintain their regulatory animosity towards expanding domestic gas production in the west.
If Western commitment to Net Zero falters and Western gas production surges, international gas prices could fall below the strike price of these major Chinese futures contracts. The billions of dollars in profits that the Chinese gas pirates and their accomplices expect if they corner the market would translate into huge losses (the brown area of the chart at the top of the page).
I doubt that only Chinese entrepreneurs are involved in conquering the gas supply market. Chinese companies may have bought the gas futures contracts, but who owns these Chinese companies? Who sits on the boards of directors? Who provided the money? Who Receives Profit Sharing?
We have no way of knowing for sure who is involved. And it’s worth noting that it’s not against the law to corner the global gas market by buying gas futures, so I’m not accusing anyone of any crime. Let’s just say I wouldn’t be surprised if some wealthy and influential westerners were involved in this perfectly legal scheme which I believe aims to rip off ordinary western energy consumers.
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