Save for later Print Download Share LinkedIn Twitter Soaring prices for natural gas and LNG have incentivized fuel switching for heat and power generation in Europe and Asia. Dutch TTF benchmark gas touched €350 ($300) per megawatt hour on Aug. 26 and is now trading at around €240/MWh — the oil equivalent of $414 per barrel. The shutdown of Nord Stream 1, the main Russian gas pipeline to Europe, in retaliation for Western sanctions will keep prices under pressure. Oil is now so much less expensive than gas — or even coal — in Europe that potential oil switching could mitigate, if not offset, the demand erosion linked to recessionary pressures. Gas-to-oil substitution is already happening, especially in Germany where residential and industrial users will have to reduce their gas demand by 25% by the end of April 2023. The European Commission estimates that to cope with Russia cutting back supplies, member states will need to replace 7 billion cubic meters of gas with burning oil. Replacing this gas would require an additional 42 million bbl of fuel oil for industrial use or power generation, or at least 230,000 barrels per day if used over a six-month period. Globally, Energy Intelligence estimates additional demand from fuel-switching will boost oil consumption by up to 1 million b/d. Compared to LNG, which must be liquified at minus 162° C to be transported and regasified on its delivery spot, oil is easy transport. In Europe, however, Germany has been struggling with low water levels in the Rhine river, which prevented easy gas-to-fuel switching by essentially shutting down a vital lifeline for refined products shipping from the Amsterdam-Rotterdam-Antwerp storage hub.