Time for a Gas OPEC?
A recent CSIS article has explored the possibility for an OPEC-like organisation for the international gas market. The closest current organisation is the Gas Exporting Countries Forum (GECF), though this does not act in a similar manner to OPEC since it does not try and balance market prices. Nikos Tsafos questioned whether this organisation, or another, might evolve into a market coordinating mechanism.
Lower gas prices suggest that top exporting countries would be keen to try and force prices up. However, price predictions are much more complex than oil since demand is more 'varied and elastic'. It means that attempts to control markets can rapidly backfire and kill off demand. The article suggested that by contrast any organisation would need to attempt to control market prices by keeping them low.
Another point to explore is what states would be involved. Of the top ten exporting states, five are Western states. Notably of course is the United States in third position, with 9.9% of export share. In the past, OPEC has been the subject of criticism and 'punishing' legislation to stop them controlling the market in a negative and coercive manner. One has to muse how might a gas organisation might be composed. Would the US dominate it? And if so, would other states (even allies) be open to the idea of joining it? Further, with Russian gas exports being down 88% since the onset of sanctions in 2014, exporting states will be acutely aware that any opportunistic behaviour might likely be punished.
Gas certainly has a future. According to all projections of future energy transitions, gas retains its market share and in some scenarios increases as coal falls even factoring in renewable growth (BP). What is worth intently following is what state will lead the initiative to form an OPEC like organisation, or indeed whether any state feels it worthwhile.
Photo Courtesy of Geograph.org.uk
At the time of writing, Toby Irwin is a third year student at the University of St Andrews. He is studying International Relations. Areas that interest him the most are UK foreign policy and the defence/aerospace industry.