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

Natural Gas Prices on Three Continents

1,2
 and
2,*
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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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 natural gas; crude oil; thermal parity
This is an open access article distributed under the Creative Commons Attribution License (CC BY 3.0).
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Erdős, P.; Ormos, M. Natural Gas Prices on Three Continents. Energies 2012, 5, 4040-4056.

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