• Worldwide demand for natural gas following increased supply in puzzle for economists

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      Patrick Lavery

      Combustion Industry News Editor

The Financial Times has looked at the somewhat unexpected rise in demand for natural gas following a rise in supply. Last year, US Energy Secretary Rick Perry was widely derided by economists for saying that with a rise in coal output, a rise in demand would follow, because of the relationship between supply and demand. Economists pointed out that it is demand that in theory produces supply, and that Mr Perry had misunderstood how things work. In the case of natural gas, however, Mr Perry’s conception of supply and demand has proven true – the glut of supply of natural gas driven mainly by new production from the US and Australia has been absorbed by new demand. China’s consumption of the gas has risen sharply as it has sought to reduce coal consumption for cleaner air, while countries as diverse as Pakistan, Egypt, Jordan, Lithuania, Mexico, Brazil and Argentina have all been buying more. Even higher production of natural gas is expected over the coming years, and it will be interesting to see if demand follows, though unfortunately for Mr Perry, it may be at the expense of demand for coal.