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The Growing Impact of Global Gas

A globe in a blue network, representing the growing impact of global gas.


European gas prices have traded to record levels as a result of the Russia-Ukraine war and lower Russian pipeline imports, forcing regional power prices to rise to record highs. We expect power prices to remain very high through 2024, which could cost the region ~7% of its GDP, before normalizing from 2025 onward as new supply comes to market. Our full report details impacts, with contributions from 16 equity analysts and 3 policy analysts.


European gas prices, and by extension, power prices, should remain elevated through 2024. This comes as a result of Russia cutting off pipeline supplies despite the region’s efforts to reduce consumption. This could also result in a $1.4 trillion/yr impact, or nearly 7% of the region’s GDP. However, we expect prices to move back to historical levels (or even below them) after 2024, with 100MM tpa global liquified natural gas (LNG) capacity being added between 2025 and 2027.


Our full report represents the combined effort of Cowen’s research department, with inputs from 16 research analysts and 3 Washington policy analysts. It builds on previous work exploring global gas markets as the commodity with the most upside going into 2022. In the following, we will address the potential impact on Traditional Energy, Energy Transition, Consumer, TMT, and Industrials.

Traditional Energy

High global gas prices are positive for global gas producers with exposure to those prices, and US refiners, as higher EU gas prices drive up the global cost curve. Higher demand for US LNG is positive for US gas producers. Oilfield services benefit from greater levels of spending on services provided by oilfield services (OFS) companies, specifically those levered to ex-US locations.

Energy Transition

RePowerEU accelerates energy transition. Solar power combined with heat pumps can be used to electrify heat supply and provide individual energy security, benefiting solar and energy storage.

EV charging companies that operate as charge point operators with models predicated on throughput/energy sales could be negatively affected.European lithium-ion battery manufacturers can face higher costs as a result of the energy-intensive process.

Industrial gas producers on the packaged & merchant side could face more headwinds than those with on-site businesses that have contractual pass-throughs.


Tobacco companies could see lower consumption in combustible cigarettes, while heat-not-burn  categories could be more resilient due to consumer investments on initial devices and lower heat-not-burn consumable prices.

Non-alcoholic beverage companies should be able to offset margin headwinds from price and mix, while alcoholic beverage companies are more exposed to consumer softness.

Retailers and brands are likely to face higher costs related to supply chain, stores, and distribution centers, given higher electricity costs.

Consumer brands with lower pricing power or lower profit margins could see the most negative consequences within retail, while luxury companies may hold up better.

Out-of-Home Advertising could see some impact from lower ad spend, but not the extent of the 2008-09 recession.

The gambling industry has proven resilient in past recessions, though the adoption of online gambling may skew vulnerabilities to broader consumer spending trends.


Cybersecurity impacts should be relatively limited compared to other sectors, given structural growth supports, though high energy costs will affect profitability.

Data center operators with a high proportion of all-in power contracts are more exposed than those with metered power contracts; we do not expect to see an abatement of European data center demand as a result of high-power prices, given customers driving regional demand.

Crypto requires power-purchase agreements and geographic diversification to manage energy risk.


Airlines could see declines in European leisure traffic as the region faces a recession.

Certain industrial companies may face challenges as higher regional operating expenses could result in manufacturing migrating from Europe.

Industrial Gas companies could see headwinds within their packaged & merchant exposure. While on-site is contractually protected, we have longer-term concerns around manufacturing capacity migrating away from Europe due to high energy costs.

Diversified industrials with high manufacturing exposure face similar headwinds from higher regional energy costs. However, some of these companies provide equipment supportive of Europe’s energy dependence, which remains in focus following the war.

WHAT TO WATCH IN 2023 & 2024

The next 24 months could be very volatile for EU gas and power prices. Inclement weather would result in an even tighter market. Russia is still providing nearly 4bcf/d gas to Europe, which is at risk into winter. China demand is off materially y/y, and easing Covid lockdowns could quickly add global LNG demand.

Conversely, continued European-mandated or voluntary reductions in gas consumption, either as a result of higher alternative power uses, lower industrial demand, and/or lower residential & commercial demand, could ease balances.

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