Friday, June 27, 2008

Natural Gas vs. Oil

Here's something I don't understand: if the spike in oil prices is due to Peak Oil, why are natural gas prices also spiking?


oilandgas said...

it is actually the rising cost of offshore exploration that cause the price to soar. but since it is not as killing as the current oil price in the world market due to higher demand for oil compare to natural gas.

John Fleck said...

One possible explanation: oil prices are not rising because of peak oil, but rather a more complex mix of factors that also apply to natural gas, steel, potash, etc., which are also spiking. Or maybe it's peak everything?

Anonymous said...

Natural gas prices rise and fall because of supply and demand, primarily. The demand for natural gas is rising at present because consumers are switching from fuel oil to natural gas. Consumers can range in size from large electric utilities down to smaller residential homeowners; i.e. anyone who can convert easily from one fuel system to another. Natural gas producers also raise prices when the see high oil prices acting as a "price umbrella" over the market. The trick for the natural gas producers is to keep prices low enough to keep and attract new users, and high enough to maximize profits.