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Natural Gas Stock News: As the economy continues to struggle to find its footing, investors would be wise to include strong natural gas stocks to bolster a mundane portfolio. However, it’s necessary to understand the climate surrounding natural gas before making an investment. Natural gas stock news is largely dictated by events on the other side of the world and it's important to stay current.
You see, many people would probably guess that New York City has more billionaires residing there than any other city in the world. However, New York continues to rank second as Moscow, Russia has swept the top spot for the last four years running. Eighty-four billionaires, cumulatively worth $366 billion, reside in Moscow, compared to New York City’s 62 billionaires worth $280 billion.
The natural gas market in Russia is the life blood of the economy, like the auto industry once was to the United States, and one of the latest events affecting natural gas stock news is the escalating conflict between Russia and the Ukraine…
Pieces in the Russia-Ukraine Natural Gas Chess Match
Rising civil violence and a crumbling economy in the Ukraine are sure to cause the natural gas market volatility for months to come. That’s because Russia is to natural gas what the Middle East is to fossil fuels. During the reign of the former USSR, countries such as Slovakia, Bosnia and the Ukraine became dependent upon natural gas. As a result, natural gas is a favorite chess piece of Russia’s to play to get what it wants.
Sure enough, on April 1, the Russian government drastically increased the price of natural gas to the neighboring Ukraine via Russian natural gas juggernaut Gazprom.
Gazprom raised the price of natural gas to $385.50, on the heels of a discount it issued in December that reduced gas to a mere $268.50. Russian president Vladimir Putin offered the December discount in exchange for Ukrainian president Viktor Yanukovych disassociating his country with the European Union.
The deal between Putin and Yanukovych proved to be extremely unpopular in Ukraine, particularly with radical groups such as Right Sector. Civil disobedience and mob violence eventually forced Yanukovych to flee from Ukraine to Russia.
The rising tension between the two nations in early 2014 has already had a profound effect upon European natural gas stock news. In some markets, gas prices have increased by as much as 2%, while gas futures have increased by as much as 10%.
Russia is Europe’s largest supplier of natural gas – it alone provides more than 30% of gas to the entire continent.
If a conflict between Russia and Ukraine leads to all out warfare, the price of natural gas in Europe is sure to climb even higher, and will globally spike the price of natural- and petroleum -based gas.
Since wealthy countries like Germany are so dependent upon Gazprom’s resources, the prices of their merchandise could also increase. And companies such as Texas-based Cheniere Energy Inc. (LNG) could derive a large increase in profits since the global market dictates the price.
If Russia increases the price of natural gas to the entire European continent, foreign markets will be able to increase their prices in suit.