LEILA FADEL, HOST:
This war is disrupting the global economy. It looks like it's only going to get worse. This week, Israel struck a major Iranian gas field. And Iran attacked the world's largest liquefied natural gas complex in Qatar. And energy markets are responding. What will this all mean long-term? That question is why we've invited Ira Joseph, a gas analyst at Columbia University's Center for Global Energy Policy, to join us this morning. Good morning, Ira. Thanks for coming on the program.
IRA JOSEPH: Thank you, Leila. Good morning.
FADEL: So these attacks pushed up oil and gas prices yesterday. Here in the U.S., that affects gas prices for your cars, heating oil, electric bills. Where do you see prices heading as a result of this ongoing war?
JOSEPH: Well, for oil prices, certainly, we definitely see more risk coming forward. The big difference is for natural gas prices in the U.S. - have barely moved while natural gas prices in Europe and Asia have gone up significantly.
FADEL: Interesting.
JOSEPH: The U.S. is a large net exporter of LNG and still is basically running at its export capacity. So the difference between oil and gas - oil and natural gas, I should say, is quite significant in the U.S. But worldwide, there's much more of a global effect on both.
FADEL: So in the U.S., people would really see increased prices around what? What they're putting in their cars?
JOSEPH: Yeah, absolutely. If you're putting gasoline or diesel fuel in your car, you've definitely seen prices go up. Whereas, if you're using natural gas in industry or for power generation or in your home, you shouldn't see any increase at all at this point.
FADEL: And will the U.S. be sort of isolated from that impact forever, based on the fact that it's an exporter?
JOSEPH: Well, on the natural gas side, for now at least. And it's hard to say forever, of course. But for now, it will be because the U.S. is export-constrained. It only has a certain amount of infrastructure to export liquefied natural gas - or LNG. And so, until more capacity is built, and if U.S. natural gas production doesn't keep up with it, you could see higher prices. But for now, the constraints are in place.
FADEL: Let's talk about that global impact of the attacks on the gas facilities in Qatar and Iran. Where are people seeing the impact, economically and energy-wise?
JOSEPH: You're definitely first going to see it in Asia, where - because we've lost, at least temporarily, all of Qatari LNG production of around 77 million tons per year. Eighty-five percent of that went to Asia. So the countries that are most price sensitive in Asia - the countries like Pakistan, Bangladesh, Thailand - are really going to be hit hardest the most quickly because they were heavily reliant, particularly on Qatari LNG, but more on LNG in general. China has more of an ability to switch, you know, to other fuels for some of the needs and the ways that it uses imported LNG.
FADEL: How long could it take for these facilities to rebuild and come back online?
JOSEPH: Well, we've already learned that two of the production trains are down. And it was announced that they're down for four to five years and that the Qataris estimated at 17%. The entire facility is down, you know, that obviously would be much more significant. And, I mean, this sort of broad consensus on the estimate of how long these facilities would take to return is timed in terms of months, not in terms of weeks. So it's going to take a while for these volumes to come back into the market, which means higher natural gas prices in Europe and Asia for the time being.
FADEL: And what do the countries that do heavily rely on this supply do in the meantime?
JOSEPH: Well, they either use less energy or they turn to alternatives. In terms of turning to alternatives, you're going to turn in the immediacy to any country that's going to be burning more coal and that has more coal-burning capacity. At the top of that list would be China, which operates its coal fleet at less than 50% of capacity. And then, of course, you're going to have renewables additions like solar, wind and batteries, which, you know, aren't going to, you know, increase instantaneously. But they have been rapidly increasing even on a week-to-week and month-to-month basis worldwide for the past five years. So you'll see more capacity there.
But in the most immediate moment, you know, it's really coal. And then after that, we have demand destruction. We have industries, you know, shutting down or cutting back use of natural gas. These are industries that use gas for what's called a feedstock rather than a fuel, which means industries like petrochemicals, fertilizer industry, those industries. And there you certainly see the knock-on effect to other markets.
FADEL: Ira Joseph is a global fellow at Columbia University's Center for Global Energy Policy. Ira, thank you for your time and your insights.
JOSEPH: You're welcome, Leila. Have a good morning. Bye, bye.
FADEL: You too. Transcript provided by NPR, Copyright NPR.
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