Mr. Gheit: It has been volatile. I think gas prices have been flat. They definitely have not kept up with surging oil prices. The industry fundamentals kept gas in check, while oil prices have been obviously benefiting from all the global tension, excessive speculation and so forth.
TWST: Why haven't we seen the same reaction in gas prices, given all the
political and fear issues that have boosted oil prices?
Mr. Gheit: Natural gas is more of a regional commodity; oil is more global. Any
international crisis will have an impact on oil prices, but obviously would not
have the same impact on natural gas prices. The disparity between gas prices
from different regions is magnified significantly higher than the disparity in
oil prices. For example, the gas price in Argentina is between $1 and $1.50; the
gas prices in the US and Europe are between $6 and $7. The gas price in
Equatorial Guinea or West Africa in general or in the Middle East could be less
than $0.50 or even lower. Actually, we don't have to go far — there is a
disparity in natural gas between Rocky Mountain gas and the Henry Hub gas. It is
basically infrastructure and the lack of transportation that makes gas more
regional. The prices are determined by supply and demand based on a regional,
not on a global basis.
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