Full Title: Natural Gas Pricing and its Future
Author(s): Anthony J. Melling
Publisher(s): Carnegie Endowment for International Peace
Publication Date: January 1, 2010
Full Text: Download Resource
Description (excerpt):
Unlike other internationally traded commodity markets, natural gas has disparate regional benchmark prices. The dominant mechanism for the international gas trade, however, remains oil indexation, which originated in Europe in the 1960s and spread to Asia. A contrasting mechanism based on hub pricing and traded markets developed in the United States and has spread to continental Europe via the UK. Today, Europe is witnessing an unprecedented collision between these two pricing mechanisms and gas industry cultures. According to the International Energy Agency, one of the most essential questions related to global energy supplies and security is whether the traditional link between oil and gas prices will survive.