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the price dynamics of natural gas have been dominated in the past 2 years by the unexpected emergence of shale gas in the US - there has been a temporary, but very significant, surplus of natgas, thus leading to lower prices, and disconnecting gas prices from oil prices. There are simply not enough players able to arbitrage away the difference.

And lower natgas prices in the US are passed on partially to Europe as these past two years were supposed to see massive arrival of Qatari LNG into the US, volumes which instead went to Europe and helped depress prices there to some extent (at least in the UK, but less in Europe where prices are more dominated by oil-indexed Russian contracts).

Wind power

by Jerome a Paris (etg@eurotrib.com) on Mon Aug 23rd, 2010 at 04:16:33 AM EST
[ Parent ]
Thanks. I was aware of that, but it's useful to have verification by an expert.

But my point is that the market architecture of the natural gas market is structurally different in that it has not become financialised in the way that the oil market - which is also oversupplied, but no-one knows how much - currently is.

My thesis is that the crude oil market has been systemically manipulated by producers for some time, funded by 'free' money from ETFs.

I have seen no refutation of this, and via the FT Alphaville blog, directly and indirectly received considerable agreement.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Aug 23rd, 2010 at 07:39:03 AM EST
[ Parent ]
I fail to see why shale gas should be a temporary solution (except that it, like tar sands, will run out some time in the long run). The resource base is huge, and while the individual wells decline at an incredible pace, you can drill an incredible number of new wells. Indeed, you have to do that. That only tells me Baker Hughes will be busy in the future.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Tue Aug 24th, 2010 at 10:43:34 AM EST
[ Parent ]


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