Publications: Notes at the Margin

The Next Energy Crisis? (May 12, 2025)

 

For decades, energy market followers have written about the parity of natural gas and oil prices. Natural-gas-exporting nations have tied or tried to tie long-term gas prices to oil prices. Previously, buyers resisted these pressures as natural gas prices collapsed while world oil prices surged. More recently, though, many contracts have been linked to the gas price at Henry Hub, the primary US pricing location.

 

This market transformation may have unforeseen economic consequences for world consumers and be an inflationary curse for President Trump as global and domestic demand for US supplies exceeds production capacity. Large price “spikes” and shortages could be coming. In a surprising reversal, oil producers may pursue natural gas price parity.

 

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