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Posts tagged “LNG”

By James Hamilton on Jun 12, 2012 with 2 responses

Why Using Natural Gas Can Be a Positive Story for the U.S. Economy

The figure below plots the price of crude oil in dollars per barrel and the price of natural gas on an equivalent BTU basis. Historically, the two prices had tended to stay fairly close together. But they began to diverge significantly in 2006. Even with the recent easing in oil prices, today you’d have to pay over $14 to get a million BTU in the form of crude oil, but only $2.30 if you were willing to use natural gas as an alternative.

Black line: price of crude oil (West Texas Intermediate, dollars per barrel, end of month values, from FRED). Green line: 5.8 times price of natural gas (Henry Hub Gulf Coast spot, dollars per million BTU, end of month values, from EIA).