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Legendary gas trader says Europe’s energy crisis could spread to the US if it ditches fossil fuels too fast

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Europe’s energy crisis holds lessons for the US, John Arnold said.

  • Europe’s energy crisis holds a warning for the US, former Enron natural gas trader John Arnold said.
  • Moving away from oil and gas too quickly could cause energy price spikes, the Centaurus Capital founder argued.
  • The billionaire said it would risk a voter backlash to decarbonization, vital to tackling climate change.
  • See more stories on Insider’s business page.

A billionaire former natural-gas trader said the US could soon be hit with big energy price spikes of the sort currently causing chaos in Europe, if the country tries to move away from fossil fuels too quickly.

John Arnold, the billionaire founder of the energy-focused Centaurus Capital hedge fund, said at the weekend that “efforts by some to kill oil/gas industry will result in price spikes to levels that risk losing voter support for the energy transition.”

“The energy crisis in Europe is a wake-up call that [the] US must ensure a smooth transition to decarbonization,” he tweeted.

Countries and corporations have made commitments to net-zero carbon emissions within decades to help combat climate change.

Natural gas prices have soared in Europe in recent months, as governments have loosened COVID-19 restrictions and demand for energy has bounced back. A long winter and strong demand from Asia has also depleted supplies.

Yet another key factor pushing up energy prices has been a slowdown in production from renewable sources, with a lack of wind in the North Sea reducing wind-generated energy.

Arnold, who was also a trader at Enron, said Europe’s experience holds lessons for the US. He said a rapid shift away from oil and gas at a time when renewable energy infrastructure might not be able to make up the shortfall could be damaging.

Read more: 2 commodities experts told us this is one of the most exciting environments they’ve seen in 40 years of investing. Here’s why they’re upbeat, and what they’re buying to profit from it.

“While some advocate trying to destroy the fossil fuel industry as quickly as possible, the reality is oil and gas consumption will be high this decade in any decarbonization scenario. Clean energy is growing quickly but off a very low base,” Arnold said.

“Very high oil/gas prices risk a voter backlash against decarbonization policies, which are vital to a cleaner future.”

US natural gas prices have risen less sharply than those in Europe, where gas futures have risen more than 500% over the last year.

But investors reckon the natural gas crunch will force users to turn to oil, helping the benchmark Brent crude oil price surge above $80 for the first time in three years on Tuesday. WTI crude, the US benchmark price, rose more than 1% to $76.20 on Tuesday and has climbed 57% over the last year.

Environmental campaigners have argued that Europe’s energy crisis would be less severe if governments had invested more in green energy, particularly storage.

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