The spot price of liquefied natural gas (LNG) soared by 40 percent to a historic high of $56.3 per million British thermal units (MMBtu).
This came after a price increase of $16.65 from Tuesday, the largest single-day price hike on record, according to S&P Global Platts’ Japan-Korea-Marker (JKM).
The price of LNG around the world is rising rapidly amid increasing energy demand and low inventories.
The government may restrict fuel imports to avoid exorbitant prices and shift toward using furnace oil and coal in power production. Currently, these two commodities are more affordable than LNG.
The price of LNG under the long-term contracts is estimated to be about $15 per MMBtu. Pakistan tends to buy about 30-35 percent of its total LNG imports from the spot market and imports the rest under long-term contracts with suppliers.
Pakistan is expected to experience another gas shortage this winter, following three consecutive years of supply constraints. As the winter season commences, consumers’ demand for gas and heating will rise, and they will start to use household gas heaters and geysers.
The government has introduced a seasonal electricity package, which offers a discount of Rs. 5-7 per unit on the additional consumption of electricity. This may incentivize consumers to use heating appliances and systems that use electricity instead of gas.
Brent crude oil futures were trading at about $81 per barrel.
This is why, as much as people hate hearing about this, Pakistan is a failed state as they cannot provide the bare necessities that its citizens need.