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Natural Gas/Crude Spread Hits Record

May 9, 2011


The spread between natural gas and crude oil has hit an all time record. Using inter-market analysis allows us to compare the value of substitute goods using equal measurements such as MMBtus, in this case, we can compare the price of crude oil to the price of natural gas to determine what price levels it becomes cost efficient for the markets’ participants to shift their energy needs from crude oil to natural gas and vice versa. 

Although this is limited, it will drive demand for new and existing power plants to be powered by Natural Gas, and there is momentum for transportation such as trains, autos, and trucks, to switch to Natural Gas increasing demand and prices in future years.