Oxford Institute for Energy Studies – What Drives International Gas Prices in Competitive Markets?

The October 2024 report by the Oxford Institute for Energy Studies critically examines the factors influencing international gas prices in competitive markets, challenging four common misconceptions and proposing a new hypothesis. The study debunks the fallacies that gas prices are solely determined by marginal costs, that Europe was dependent on cheap Russian gas, that the TTF market was "broken," and that gas prices are primarily driven by supply constraints. Instead, it posits that gas prices are influenced by a complex interplay of factors, including market globalization, flexible LNG supplies, and dynamic demand patterns. The report emphasizes the need for a nuanced understanding of gas pricing mechanisms to inform policy and market strategies effectively.