Why is Natural Gas related to petrol pricing?

[ajgiorgi]

Somebody tell me why nat gas goes up when the price of oil goes up. Is it just because it's winter now or what? It doesn't require as much refining, right? They just filter it, right?

Drop some knowledge on me,
Anthony

[Timon]

Re: Why is Natural Gas related to petrol pricing?

THis has been talked about a lot. See here.

Many think the word "Greed" tells the whole story but you can come to your own conclusion.

[ch4]

Re: Why is Natural Gas related to petrol pricing?

Somebody tell me why nat gas goes up when the price of oil goes up. Is it just because it's winter now or what? It doesn't require as much refining, right? They just filter it, right?

Drop some knowledge on me,
Anthony

Hi Anthony:

Nice to hear from someone from the land of Atari.

Historically, market natural gas future prices have not been connected to oil prices for many reasons, some you already stated.

check out the futures market: http://bigpicture.typepad.com/commen...ersus-gas.html

However, some businesses do not market price their product. In fact, China used to do the same thing by linking the price of their currency, the yuan, with the US dollar. With pressure from the US and other nations China finally stopped this anticompetitive and anti-market practice.

http://www.iht.com/articles/2005/07/21/business/web.0721yuan.php

I believe that the price you pay in CA for CNG may be linked to oil because that is the mission statement of the companies.

That is, the company you buy CNG from has made a decision that the price has nothing to do with the natural gas market and everything to do with the price of a gallon of gasoline.

ch4
Security is not a set of easy to follow rules, security is not trusting people.

[rtry9a]

Re: Why is Natural Gas related to petrol pricing?

Clean Energy's price gouging aside, the reason natural gas prices move in sync with oil prices is because in many industries and utilities, the choice of burning natural gas or burning fuel oil in steam boilers are interchangeable.

Historically, the price relationship has hovered around 6:1 based roughly on the relative btu contents, at least until this last year when demand the and cartels pushed the price of the world oil markets high and fast. A glut of natural gas in storage (related to several consecutive warm winters in a row in the US), have kept ng prices low. The current price ratio is about 10:1.