Market Cycles

Abstract

The French phrase “Plus ca change, plus c’est la meme chose”, might have been invented by a student of the world gas market. The phrase is an affirmation that many things move in cycles, and certainly the world gas market is characterised by repeated cyclical movements of supply, demand, and price. The phrase shows more wisdom than many, more experienced, observers of the gas market, who, in the 1970s, could see no end to the sellers’ market and today can see no prospect of a return to it. In the 1970s, the rapid growth of gas use and the fear that supplies were running out, led to many purchase and investment commitments based on a view that the boom would continue. We are now living with the fruits of this excess optimism. Today, many supply commitments exceed existing demand and there is downward pressure on prices. Just as before, some people see no end in sight to the current buyers’ market. Just as before, they will be wrong.