Natural Gas Prices on Three Continents

Peter Erdos and Mihály Ormos

Energies, 2012, vol. 5, issue 10, 1-17

Abstract: We investigate the pricing formation of natural gas markets on three different continents (Europe, Asia and North America). We find that natural gas markets showed a strong relationship with the crude oil market between 1992 and 2001 and natural gas prices tended to thermal parity with crude oil prices. From 2002 natural gas markets exhibited a less pronounced relationship with the crude oil market and major natural gas markets were severely underpriced compared to crude oil. A globally integrated natural gas market, comparable to the global oil market, has not evolved. The main natural gas markets, however, exhibit some level of integration, especially over a longer time. The European market exhibits the strongest levels of integration, while the North American market exhibits the weakest.

Keywords: natural gas; crude oil; thermal parity (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (8)

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