Why $70 Should Be the Most Worrying Number for LNG

Here’s some back-of-the-napkin math to show why LNG producers should be fearful for their future, even if the crisis in the Strait of Hormuz hadn’t just knocked a fifth of global supplies offline.

Take the market price of LNG in megawatt-hours (currently about $50 in Asia), double it, then add $4 or so for operating expenditures. That’s a decent proxy for the costs of electricity from an existing gas generator. If your answer is above $70, then in most of the world, gas is about to get squeezed out by renewable alternatives.