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Energies 2012, 5(10), 4040-4056; doi:10.3390/en5104040

Natural Gas Prices on Three Continents

1 Swiss Institute of Banking and Finance, University of St. Gallen, Rosenbergstrasse 52, 9000 St. Gallen, Switzerland 2 Department of Finance, Budapest University of Technology and Economics, Magyar tudósok krt. 2., 1117 Budapest, Hungary
* Author to whom correspondence should be addressed.
Received: 17 April 2012 / Revised: 8 October 2012 / Accepted: 9 October 2012 / Published: 19 October 2012
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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 natural gas; crude oil; thermal parity
This is an open access article distributed under the Creative Commons Attribution License (CC BY) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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Erdős, P.; Ormos, M. Natural Gas Prices on Three Continents. Energies 2012, 5, 4040-4056.

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