Why are natural gas prices so much higher?
Since I think natural gas is harder to transport across oceans I’m guessing most natural gas consumed in the US is produced nearby in the US, Alaska, and Canada. If the growing economies of China and India are pushing up world wide oil prices, it seems less plausible that this same effect could effect our natural gas prices. They are predicting 50-100% higher cost this year. It is really maddening.
July 6th, 2009 at 3:16 pm
The price of natural gas is based on market economics ie demand and supply.Just like crude oil.Cost of 1mmBTu in Nigeria is around 0.5$-1$ in special circumstances.
July 6th, 2009 at 3:16 pm
natural gas prices are affected by oil prices because most facilities that burn natural gas have dual fuel capability to burn oil, so they shop around for the cheapest Btu’s. When oil prices go up people switch from oil to gas, driving up gas prices by virtue of supply and demand. Additionally, in the winter when demand for gas is high, there are sometimes gas pipeline capacity constraints that further raise the price of gas…again because demand exceeds the ability to deliver into the market.