The Gas Industry Might Need A Massive Cash Injection

The Gas Industry Might Need A Massive Cash Injection
Theodora Lee Joseph, CFA

about 1 month ago2 mins

What’s going on here?

A Japanese think tank asserted that the gas industry needs a massive injection of cash, otherwise the world might run dry before 2050.

What does this mean?

The world’s on track to run out of gas in the coming decades unless the industry finds an additional $7 trillion, according to the Japanese Institute of Energy Economics. But that figure isn’t set in stone: it depends on how much gas we use, and that depends on how quickly green energy ramps up in the meantime. That $7 trillion figure is based on the globe cutting down on emissions by 56% before 2050 – and the International Energy Agency believes that’s possible, saying that gas demand will peak in the next few years. That’s no guarantee, though, and if that target isn’t reached, the sector will need to find almost $10 trillion to fund new plants and maintain existing ones in a bid to keep up with demand.

Gas demand to slow
Source: International Energy Agency

Why should I care?

For markets: A bit of dirt never hurts.

The jury’s still out on the future of fossil fuels. Major players like Chevron and Shell, for example, think gas will be a key energy source in the long run, even as dirtier coal takes a backseat. Despite projections like that, though, investment in the gas sector fell 58% between 2014 and 2020. And now that more money is pouring into renewable energy projects, it’ll only get harder for old-fashioned projects to attract wads of cash. Unless that changes, the price of gas could end up a whole lot more volatile than it has been before.

Gas production to decline

The bigger picture: Industry changes are nuclear.

Mind you, green energy isn’t the only theme attracting investors: energy security and nuclear energy projects are both grabbing attention right now. Nuclear energy company Orano just funneled nearly $2 billion into a uranium-enrichment plant in the south of France, spurred on by the prospect of western countries limiting their reliance on Russian gas.



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