Exceptionally warm weather, oversupply, and slowing economic growth have contributed to a crash in the price of natural gas as opposed to the oil price which is still well above pre-Russian invasion prices. Gas prices have crashed below pre-war levels. Miriam Dalli signed a gas-purchase agreement based on an oil-index price change whereby the Maltese government bet that the oil price would go down, and the gas price would remain elevated forever – the exact opposite has happened. The government is currently issuing millions of Euros in subsidies to keep electricity prices low. Had the government simply purchased gas at market prices and hedged accordingly when the gas price was extremely high in September 2022, Malta would be making profits on its purchases, instead of huge losses.
The price difference is huge and the Miriam Dalli is way off her bet. Someone should be asking Miriam Dalli’s favourite consultant what he thinks about this. The price difference since Miriam Dalli signed her bet in April 2022 is accordingly:
Brent Crude: -16.77%
NATGAS: -68.87%
Despite very low prices, gas prices still have room to go down further in the future if the US ramps up exports and production. The gas market can be easily oversupplied if the US decides to aggressively increase exports and production. Gazprom is also desperately trying to find new buyers for its gas supplies after losing its biggest customer (Europe) and the Chinese are not buying as the Russians had expected. The oversupply situation in the market is very clear.
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Historian and Publisher
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