why Gas Prices going down

(edited)

Gas prices is also turning down. so what is this can some one explain the inter connection with this and how are we can expect the falling 

       
         
  NATURAL GAS  4.515  -0.131 -2.82%
Edited by Udara Hemachandra

Share this post


Link to post
Share on other sites

For years, on a b.t.u. basis crude and natural gas semi-tracked each other. In the USA, and with the fracking revolution natural gas in the us essentially decoupled and became much less b.t.u. wise.. Not a big T Boone fan, but shifting short range industrial vehicles to natural gas across the country, I liked that idea of his.

When using LNG the b.t.u. cost differential sort of goes away. I don't know, but I suspect basic production cost for say, Qatar, is probably quite low, but once you factor in the compression trains, and distribution expense, and customers with less choices, natural gas globally wasn't the money saver it is for the US consumer.

I suppose gas and oil do have to compete with each other for capital for drilling and CAPEX dollars and so that continues a link of sorts. Money wants a rate of return, always.

My personal suspicion, for many years oil in the US was dominated by large majors, while gas was still done by relatively small players and in a sense was a more honest game. Capitalism requires more than a few producers to truly work. In the last few years the Exxons and BPs started buying in. Add future traders in a business that was historically mostly short term spot buys, and I suppose you can't help but get more volatility in the pricing as the business becomes a complex financial tool, not just the business of exploring, drilling, distributing, and selling. I hope I am wrong there. Some gas person should chime in. My experience is very large, national oil company centric and there they liked to think they could set the market. Cost of production wasn't really a factor in pricing like it must be in the US gas market. 

  • Great Response! 1

Share this post


Link to post
Share on other sites
Sign in to follow this  
Followers 0