Will Natural Gas Prices Decouple From Oil Prices Across the Pond?

June 1, 2011

Preview Citation

Format: Chicago

Reinout De Bock, and Jose G Gijon. Will Natural Gas Prices Decouple From Oil Prices Across the Pond?, (USA: International Monetary Fund, 2011) accessed September 19, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

We show that US natural gas prices have decoupled from oil prices following substantial institutional and technological changes. We then examine how this interrelationship has evolved in Europe using data for Algeria, one of Europe’s key gas suppliers. Taking into account total gas exports and cyclical conditions in partner countries, we find that gas prices remain linked to oil prices, though the nexus has loosened. Both high oil prices and a modest industrial recovery in partner countries have kept gas exports at low levels in recent years, suggesting changing market forces. The paper then shows how such shifts can have important macroeconomic implications for a big gas exporter such as Algeria.

Subject: Economic sectors, Export prices, Exports, Fuel prices, International trade, Natural gas sector, Oil prices, Prices

Keywords: Algeria, Commodity prices, Energy economics, Europe, Export prices, Export volume, Exports, Fuel prices, Gas exporters, Gas price, Gas prices in the US, Global, Hydrocarbon price, Indexed contract price, IP shock, Natural gas, Natural gas price, Natural gas sector, North America, Oil, Oil prices, Oil-indexed gas price, Oil-price indexed contract, Price, Price assumption, Vector autoregressions, Volume terms, Wellhead gas price, WP

Publication Details

Pages:

21
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/143
Stock No:

WPIEA2011143
ISBN:

9781455266449
ISSN:

1018-5941

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