Natural Gas, Natural Prices

By November 13, 2007Energy

Manufacturers are heavily dependent on natural gas in part because Congress, in its infinite wisdom, has encouraged them to rely on gas instead of other fossil fuels. Natural gas is more environmentally friendly than coal or oil (but not nuclear, of course. Nothing is more environmentally friendly than nuclear power.)

Unfortunately, natural gas does not have a world price like oil. We only have six teriminals for offloading Liquefied Natural Gas in this country, the same number as South Korea. So natural gas is priced according to local supply and demand. In the wake of Hurricane Katrina in August 2005, natural gas prices shot up and manufacturers took a big hit.

But now oil prices are going through the roof while the price of natural gas remains stable. (As reported by Floyd Norris in the New York Times.) Oil has been pushing historic highs, knocking on $100 a barrel. Natural gas is actually selling for a little less than it did at the end of last year. This is good news for manufacturers and consumers who use natural gas. They might have a little extra in their stockings come December 25.

Join the discussion One Comment

  • Bill says:

    I hope for our economies sake Nat Gas stays low . But as demand goes up – well you know the rest .
    And the hedgers will not leave this one alone when they realize the disparity between Oil and Nat Gas .

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