Will Natural Gas Prices Decouple From Oil Prices Across the Pond?

Reinout De Bock and Jose Gijon

No 2011/143, IMF Working Papers from International Monetary Fund

Abstract: We show that US natural gas prices have decoupled from oil prices following substantial institutional and technological changes. We then examine how this interrelationship has evolved in Europe using data for Algeria, one of Europe’s key gas suppliers. Taking into account total gas exports and cyclical conditions in partner countries, we find that gas prices remain linked to oil prices, though the nexus has loosened. Both high oil prices and a modest industrial recovery in partner countries have kept gas exports at low levels in recent years, suggesting changing market forces. The paper then shows how such shifts can have important macroeconomic implications for a big gas exporter such as Algeria.

Keywords: WP; price; gas price; IP shock; Natural gas; Commodity prices; Gas exporters; Energy economics; Algeria; Oil; Vector autoregressions; price assumption; volume terms; indexed contract price; wellhead gas price; gas prices in the US; export volume; hydrocarbon price; natural gas price; oil-indexed gas price; oil-price indexed contract; Fuel prices; Oil prices; Natural gas sector; Exports; Export prices; Europe; Global; North America (search for similar items in EconPapers)
Pages: 21
Date: 2011-06-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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