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The world’s gas markets are on fire.

In the last five days alone, US wholesale prices have surged 75pc while European gas has soared by more than 40pc.

Unsurprisingly, the rapid jump has prompted fears of sharp price rises for billpayers, and even triggered talk of gas shortages.

Some have even gone as far as to compare the sheer scale and speed of the recent market volatility to what occurred after Russia’s invasion of Ukraine.

But analysts believe that we are a long way from the disastrous energy crisis that emerged following the conflict.

Instead, they claim that what we are seeing now is driven by a a combination of problems – ranging from winter cold in the US to reduced gas storage in Europe.

Back in 2022, prices skyrocketed to more than €300 per megawatt hour (MWh), roughly 10 times the historical average of €20–€30 per MWh.

They then stayed that way for months as Russian supplies shut down and Europe was forced to scramble to find new sources of gas.

The recent rise saw TTF prices – the benchmark for Europe – hit a peak of €40 (£34.8) per MWh – up from €27 on Jan 9.

Yet, this time round, the world is far from facing a shortage of gas but rather a global glut – thanks to the rapid growth of liquefied natural gas (LNG).

So what’s driving the last surge in prices? And how long might it last?

“The price rises we are seeing are quite crazy,” says Andreas Schröder, an analyst at ICIS, a leading energy consultancy.

“It started simply because of the weather in America. They are facing an extreme cold spell, especially over the coming days with a very sharp drop in temperatures, including even the southern states, which produce most of the LNG.

“That could mean production outages due to weather, which would have repercussions for Europe, because a lot of our gas now arrives as LNG from the US. I think that’s one of the key drivers.”

The idea that American weather can drive up European gas prices may seem surprising, given that the gas supply chain between the two continents hardly existed a few years ago.

Since then, however, dwindling UK and European gas supplies have been propped up by the US, which has overseen the construction of several new LNG export terminals.

The UK now gets about 15pc of its gas as LNG – 80pc of which comes from America – highlighting the potential impact stormy weather in the US could have on European supplies.

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However, in practice, there has been no long-standing cut-off in supplies – meaning it hardly seems enough to explain Europe’s surging wholesale gas prices.

As a result, some have since blamed the recent volatility on Donald Trump.

Following his threat of tariffs over Greenland, aimed at the UK and its European allies, some analysts raised concerns that he could restrict US energy exports to Europe.

“Over 59pc of European LNG imports came from the US in 2025,” says a new paper co-authored by the Clingendael Institute, the Ecologic Institute and the Norwegian Institute of International Affairs.

“Such dependence exposes Europe to the risk of high costs, price volatility and geopolitical pressures.”

However, the prospect of supply restrictions never materialised, and the US president has now dropped his threats of tariffs.

This has led to Seb Kennedy, an analyst who monitors gas markets and traders, to provide another explanation.

Weather, politics and Europe’s lack of gas storage all played a key role in driving up prices but the volatility seen lately is down to something much simpler – human greed.

He says: “US weather risk drives scarcity fears in Europe, which in turn exacerbates bullish upward momentum in European gas prices.

“But what’s also driving the market is a dramatic increase in the number of people trying to make money from it.”

Before Russia’s invasion of Ukraine, the organisations playing the TTF market were roughly divided into two groups.

One comprised the 150 or so commercial organisations, energy companies and utilities, whose main aim was to stabilise prices around the gas they wanted to buy and sell. The second group comprised 200 or so hedge funds and speculators, seeking steady profits rather than huge fortunes.

But the war in Ukraine changed all of that, says Kennedy.

As gas prices soared, some traders made billions of pounds in profit.

While these private companies do not always release detailed public accounts, industry reports and financial filings indicate that the top four energy traders – Vitol, Trafigura, Mercuria, and Gunvor – made tens of billions of pounds in profits from 2022 to 2023.

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The legacy of those events is that gas markets like Europe’s TTF and America’s Henry Hub – its benchmark gas market – have seen an influx of hedge funds and speculators hopeful for similar results.

“There are now 465 investment funds holding positions in TTF futures – a record high,” says Kennedy.

“And it’s just going up, and up, and up and up, all looking for any opportunity.”

America’s cold weather, combined with Trump’s Greenland threats and Europe’s low gas storage, presented such an opportunity.

The price surge has been driven by real-world events, but massively amplified by the sheer number of traders now trying to cash in. As Kennedy puts it: “Welcome to the Gasino.”

However, while soaring gas prices will rekindle bad memories of the energy crisis, analysts are certain: households have nothing to fear.

As Norbert Rücker, an economist at Julius Baer, says: “This is nothing like the Ukraine surge. This price spike is driven partly by the memory of that energy crisis but it’s not at all the same.

“And is likely to be short so it will be a surprise if it shows up in heating bills or the power grid.”

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