[eastbay]

http://www.cnbc.com/id/31965616

Historically NG and oil have moved in relative tandem with oil averaging near 8 to 10 times the price of NG due the relationship between their energy. Oil contains 6X the energy as an equivalent amount of NG.

We're now out of synch. Oil is now 17.5X costlier as of 1pm today Pacific.

Some say either oil must drop in price or NG will rise.

Which will it be? I suspect oil will soon rise and NG will increase even more over the coming months bringing the price of oil closer to 10X NG.

[nobodypanic]

oil will drop.*






*unless there is an economic recovery; in which case it spikes, crashes said recovery and then drops in price again.

[NoWorries]

I agree. Oil won't rise significantly again unless and until the economy rebounds.

And if the economy rebounds oil has the potential to kill any recovery.

It's almost a perpetual zugzwang.

[kpeavey]

My money is on the NG. The number of natural gas power plants coming on line in the next couple of years does not consider an incremental increase in supply. Within a couple of years, NG will spike, the historical association of NG price with oil price will stop.

[Gorm]

Happy to be in a country were NG is not an issue at all :D

[kpeavey]

Never forget Substitution. When the NG gets too expensive, the market will out bid you for your oil. When that gets too high, the market will outbid you for your coal, wood, even corn. When the corn gets turned into fuel, the market will bid up every other food item that you eat.

[Gorm]

no, it will not be like that no.

a some point, the fuel to the cars will not be worth it.

[AlexdeLarge]

Deflation for the near future. Oil prices will drop a little more, as the economy collapses. But as the money to fund new exploration dries up and we continue to go down the back slope of peak oil we will see prices spike again as demand > supply, inflation ramps up. Maybe by 2012???????????

This is assuming the dollar does not go down the tube and maintains its status as the worlds reserve currency

[eastbay]

Never forget Substitution. When the NG gets too expensive, the market will out bid you for your oil. When that gets too high, the market will outbid you for your coal, wood, even corn. When the corn gets turned into fuel, the market will bid up every other food item that you eat.

Then what?

Just kidding... heh. Obviously when we burn our way through the other half of our corn crop, and start burning the rest of our food crops more and more people will be unable to afford food. Gas won't even be an issue for them.

But I have a hunch this $3.50 NG party won't last long.