Brilliant framing on the supply-side arbitrage logic. The coal displacement threshold at $6-7 TTF makes a ton of sense given efficiency differentials, i tested something similar on Southeast Asian regas economics and the band landed basically identical. What I'm curius about is how fast winter storage inelasticity actually bites compared to 2021 when global prices were high enoughto absorb US spikes.
yeah, good question! There is a lag on US LNG lifting decisions--you have to decide whether or not to take your cargoes by something like the 5th or 10th of the prior month. So, a price spike over the weekend doesn't affect lifting decisions (although if the LNG developer is smart, they will resell the gas and fulfill their LNG commitments by drawing down storage). So, short answer, probably some immediate effect, limited by what the LNG developer has in storage, and a bigger impact over a 45-60 day window if US prices are sustained high that long.
Brilliant framing on the supply-side arbitrage logic. The coal displacement threshold at $6-7 TTF makes a ton of sense given efficiency differentials, i tested something similar on Southeast Asian regas economics and the band landed basically identical. What I'm curius about is how fast winter storage inelasticity actually bites compared to 2021 when global prices were high enoughto absorb US spikes.
yeah, good question! There is a lag on US LNG lifting decisions--you have to decide whether or not to take your cargoes by something like the 5th or 10th of the prior month. So, a price spike over the weekend doesn't affect lifting decisions (although if the LNG developer is smart, they will resell the gas and fulfill their LNG commitments by drawing down storage). So, short answer, probably some immediate effect, limited by what the LNG developer has in storage, and a bigger impact over a 45-60 day window if US prices are sustained high that long.