The 2022 energy shock: gas, oil and coal prices

Published 2026-09-05; updated 2026-09-05.

The 2022 energy shock was the period, running from the second half of 2021 to the autumn of 2022, in which European natural gas and internationally traded coal reached the highest monthly averages in the World Bank’s price records while crude oil rose to its highest annual average in nearly a decade. The trigger was the invasion of Ukraine on 24 February 2022 and the rerouting of Russian energy exports that followed it, but the shock was already under way in late 2021, and its size differed enormously by fuel. European gas averaged $70.04 per million British thermal units in August 2022 against $7.27 in January 2021, while US gas over the same period went from $2.67 to a peak of $8.79 (World Bank Pink Sheet).

Why did gas rise so much more than oil?

The answer is transportability. Crude oil is close to a single world market: any tanker can carry any grade to any coastal refinery, and refiners can substitute one grade for another with some loss of yield. When barrels are removed from one buyer, the flows rearrange, voyages lengthen, and the whole world pays a modestly higher price. Brent’s 2022 annual average of $99.83 per barrel was 42% above 2021’s $70.46, and its worst month, $120.1 in June 2022, stayed below the July 2008 record of $133.9 (World Bank Pink Sheet).

Natural gas has no such flexibility. Most of it moves through pipelines that were built to connect one field to one market and cannot be repointed. The rest moves as LNG, which requires a liquefaction plant at one end, a specialized ship in the middle and a regasification terminal at the other. All three are multi-year, multi-billion-dollar assets, and none of them can be added in the year you need them. So when Europe set out to replace pipeline gas, it could not simply order more; it had to outbid other buyers for the limited pool of LNG cargoes already at sea or uncommitted, which is what a spot cargo market is for. Those cargoes change hands at a spot price set week by week rather than under a long-term contract, and the regional benchmarks that record it moved apart from one another as a result. Japan’s LNG import price averaged $23.73 per million British thermal units in September 2022, its own record, which is the mark left by that bidding contest on the other side of the world (World Bank Pink Sheet).

Coal moved for the same reason, one step removed. Coal is the substitute for gas in power generation, and it is also carried by ship, so European buying reached into the Pacific market. Australian thermal coal averaged $430.8 per tonne in September 2022, the highest monthly average since the World Bank series began in 1970, against $185.7 a year earlier; South African coal peaked at $302 per tonne in April 2022 (World Bank Pink Sheet). Substitution transmits a shock; it does not absorb it.

Two further features made gas prices extreme rather than merely high. Gas demand is inelastic in the short run: a household cannot halve its heating in a cold month, and a factory that stops production stops buying entirely rather than buying a little less. And storage is finite. Europe’s tanks are filled in summer and drawn in winter, so a summer of refilling under supply constraints created the strongest buying at the least convenient time. August 2022, the peak month, is a summer month.

The unwinding was equally instructive. Milder weather, industrial demand destruction, new LNG supply contracts and full storage brought European prices down through 2023: TTF averaged $20.18 per million British thermal units in January 2023 and $11.51 in December 2023 (World Bank Pink Sheet). Prices did not return to their pre-2021 level, but the panic premium disappeared once the physical position was known.

Monthly averages from the World Bank Pink Sheet; the three panels share a time axis but not a scale, because the sizes of the moves are not comparable.

A worked example

The clearest single measurement of the shock is the ratio between two gas prices for the same molecule in two places. In January 2021, European TTF gas averaged $7.27 per million British thermal units and US Henry Hub gas $2.67, so Europe paid 2.7 times the US price (World Bank Pink Sheet). In August 2022, TTF averaged $70.04 and Henry Hub $8.79: Europe paid 8.0 times the US price. Both markets were tighter than usual, but only one of them had to replace a pipeline.

That ratio is the value of transport capacity. If gas were as portable as oil, arbitrage would have compressed the gap to the cost of liquefying, shipping and regasifying a cargo. Instead the gap widened to the point where it was rationing demand rather than attracting supply, because the ships and terminals to close it did not exist. The World Bank’s natural gas index, which averages the three regional markets, reached 454 in August 2022 on a 2010 base of 100, its highest reading since the index begins in 1977, and stood at 143.4 in August 2026 (World Bank Pink Sheet).

The oil comparison completes the picture. Crude’s worst month of 2022, $120.1 per barrel for Brent in June, was 120% above the January 2021 average of $54.6. European gas at its worst was 863% above its January 2021 average. Same continent, same war, same year: the difference is entirely in how the two commodities move.

By August 2026 the readings were $21.11 per million British thermal units for TTF, $2.77 for Henry Hub, $13.94 for Japanese LNG imports, $90.9 per barrel for Brent and $135.2 per tonne for Australian coal (World Bank Pink Sheet). The regional gas gap narrowed but did not close, which is the durable lesson of the episode: an oil price is a world price, and a gas price is an address.

The series behind these figures are on the natural gas price page and the crude oil price page, the physical geography behind them on the natural gas origins page. The policy response, including the price cap on Russian crude, is covered in sanctions and commodities, and the general anatomy of an episode like this in why commodity prices spike.

Cite as: Commodity Origins, "The 2022 energy shock: gas, oil and coal prices", https://commodityorigins.com/learn/the-2022-energy-shock/ (CC BY 4.0).