Are Higher Energy Prices Here to Stay?
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What is the main topic discussed in this episode?
In theory, I knew that this kind of thing can happen in any family. Upstanding citizens are always turning out to be secret criminals, and I wouldn't even call my cousin Alan an upstanding citizen. But it's one thing to know and another thing to understand.
Alan, murder me?
What the hell was Alan thinking? From Serial Productions and The New York Times, I'm Em Gessen, and this is The Idiot. Listen wherever you get your podcasts.
From The New York Times, I'm Rachel Abrams, and this is The Daily.
Since the war with Iran began, President Trump has insisted that rising energy prices would be temporary. But the strikes last week on important natural gas facilities in Qatar and elsewhere in the Gulf have made the prospect of a quick recovery seem less and less likely. Today, my colleague Patricia Cohen explains why the economic impacts may be felt for years.
It's Wednesday, March 25th. Hi, Patty Cohen. Hey, Rachel. You are a first-time guest, I think?
Yes, first-time guest, long-time listener.
That's what we like to hear. So, Patti, at the beginning of the war, so much of the conversation about energy prices focused on the Strait of Hormuz, getting oil and gas out of the Persian Gulf. And because the Strait of Hormuz has been closed, oil prices spiked super quickly because of the uncertainty about when the strait would actually open again. That is still a huge issue. But it seems like in the last few days, the energy situation has expanded beyond the strait. So tell us what's been going on.
So I would say that the attacks that we saw last week on some of the energy infrastructure really moved the war into another phase in terms of both energy supplies and the global economy. Instead of talking about the impact in terms of days and weeks, now we're talking about it in terms of months and years. And why is that? Because what you had is that the production capacity, the ability to supply one of the world's really important energy supplies, which is liquefied natural gas, those facilities were bombed.
You're talking about different attacks, right? You're talking about the Israel attacks on the Iran energy infrastructure and the Iranian attacks on infrastructure in Qatar, right? Right.
Right.
Israel hit a major Iranian gas complex on Wednesday.
So the Israelis attacked Iran's infrastructure.
Prompting Iran to strike another major facility in Qatar. And then Iran retaliated. The world's biggest liquefied natural gas facility, Qatar's Ras Al-Fan, was damaged by an Iranian missile strike. And attacked the gas fields in Qatar.
the attacks, quote, fundamentally reshaped the global LNG outlook.
And that was a big deal because Qatar is a big producer of liquefied natural gas. I mean, so before we were looking at basically a transportation issue when the Strait was closed. Now we're looking at something that's longer lasting, which is the ability to produce liquefied natural gas or LNG. Let's refer to it as that.
It's a little bit easier. Yes, for sure. So what exactly was struck in Qatar?
What are the reasons for rising energy prices since the war in Iran?
So what was destroyed were two LNG trains. And they're not really trains. What they are are plants that process and convert natural gas into a liquid.
Trains feels a little misleading.
This is a facility. Yeah, I know. Yeah, it's a facility. I know. It's a kind of a weird word, but it's kind of a facility. And... It's a very expensive facility, and it takes a long time to build. And what happens is that you take gas and you freeze it to 240 or 260 degrees below zero, and then you compress it. And so it takes up 600 times less space than gas because you turn it into a liquid. And so... That's complicated. And then you have to transport it in the same specialized container so that you can bring it somewhere else.
It is not as simple as oil, it sounds like.
Right. I mean, oil is a lot easier to store and transport. And that's what makes this particularly worrisome because it's hard to store and transport LNG. And now you've just taken capacity offline.
So in total, whatever was destroyed in Qatar, what percentage of the global supply of LNG is this?
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:02–3:47
2
What are the reasons for rising energy prices since the war in Iran?
3:47–10:13
3
How have recent attacks on energy infrastructure changed the situation?
10:13–16:02
4
What impact did the bombing of Qatar's LNG facilities have on global supply?
16:02–26:03