IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/2011-143.html
   My bibliography  Save this paper

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

Author

Listed:
  • Mr. Reinout De Bock
  • Mr. Jose G Gijon

Abstract

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.

Suggested Citation

  • Mr. Reinout De Bock & Mr. Jose G Gijon, 2011. "Will Natural Gas Prices Decouple From Oil Prices Across the Pond?," IMF Working Papers 2011/143, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2011/143
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=24980
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Anne Neumann, 2009. "Linking Natural Gas Markets - Is LNG Doing its Job?," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 187-200.
    2. Stephen P. A. Brown & Mine K. Yucel, 2008. "What Drives Natural Gas Prices?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 45-60.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Akbi, Amine & Yassaa, Noureddine & Boudjema, Rachid & Aliouat, Boualem, 2016. "A new method for cost of renewable energy production in Algeria: Integrate all benefits drawn from fossil fuel savings," Renewable and Sustainable Energy Reviews, Elsevier, vol. 56(C), pages 1150-1157.
    2. Rigoberto Ariel Yépez-García & Luis San Vicente Portes & Luis Enrique García, 2013. "Planning for Higher Oil Prices : Power Sector Impact in Latin America and the Caribbean," World Bank Publications - Reports 17547, The World Bank Group.
    3. Zolotko, Mikhail & Okhrin, Ostap, 2014. "Modelling the general dependence between commodity forward curves," Energy Economics, Elsevier, vol. 43(C), pages 284-296.
    4. Jadidzadeh, Ali & Serletis, Apostolos, 2017. "How does the U.S. natural gas market react to demand and supply shocks in the crude oil market?," Energy Economics, Elsevier, vol. 63(C), pages 66-74.
    5. Mensi, Walid & Rehman, Mobeen Ur & Maitra, Debasish & Al-Yahyaee, Khamis Hamed & Vo, Xuan Vinh, 2021. "Oil, natural gas and BRICS stock markets: Evidence of systemic risks and co-movements in the time-frequency domain," Resources Policy, Elsevier, vol. 72(C).
    6. Li, Fengyun & Li, Xingmei & Zheng, Haofeng & Yang, Fei & Dang, Ruinan, 2021. "How alternative energy competition shocks natural gas development in China: A novel time series analysis approach," Resources Policy, Elsevier, vol. 74(C).
    7. Batten, Jonathan A. & Ciner, Cetin & Lucey, Brian M., 2017. "The dynamic linkages between crude oil and natural gas markets," Energy Economics, Elsevier, vol. 62(C), pages 155-170.
    8. Wang, Qiang & Chen, Xi & Jha, Awadhesh N. & Rogers, Howard, 2014. "Natural gas from shale formation – The evolution, evidences and challenges of shale gas revolution in United States," Renewable and Sustainable Energy Reviews, Elsevier, vol. 30(C), pages 1-28.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Baba, Amina & Creti, Anna & Massol, Olivier, 2020. "What can be learned from the free destination option in the LNG imbroglio?," Energy Economics, Elsevier, vol. 89(C).
    2. Amina Baba & Anna Creti & Olivier Massol, 2020. "What can we Learn from the Free Destination Option in the LNG Imbroglio ?," Working Papers hal-03181028, HAL.
    3. Nick, Sebastian & Thoenes, Stefan, 2014. "What drives natural gas prices? — A structural VAR approach," Energy Economics, Elsevier, vol. 45(C), pages 517-527.
    4. Ivan Aleksandrovich Kopytin & Alexander Oskarovich Maslennikov & Stanislav Vyacheslavovich Zhukov, 2022. "Europe in World Natural Gas Market: International Transmission of European Price Shocks," International Journal of Energy Economics and Policy, Econjournals, vol. 12(3), pages 8-15, May.
    5. Zhang, Dayong & Shi, Min & Shi, Xunpeng, 2018. "Oil indexation, market fundamentals, and natural gas prices: An investigation of the Asian premium in natural gas trade," Energy Economics, Elsevier, vol. 69(C), pages 33-41.
    6. Cornille, David & Meyler, Aidan, 2010. "The behaviour of consumer gas prices in an environment of high and volatile oil prices," MPRA Paper 39099, University Library of Munich, Germany.
    7. Atle Oglend, Morten E. Lindbäck, and Petter Osmundsen, 2015. "Shale Gas Boom Affecting the Relationship Between LPG and Oil Prices," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    8. Guo, Jiaqi & Long, Shaobo & Luo, Weijie, 2022. "Nonlinear effects of climate policy uncertainty and financial speculation on the global prices of oil and gas," International Review of Financial Analysis, Elsevier, vol. 83(C).
    9. Erdős, Péter, 2012. "Have oil and gas prices got separated?," Energy Policy, Elsevier, vol. 49(C), pages 707-718.
    10. Brown, Stephen P.A., 2017. "Natural gas vs. oil in U.S. transportation: Will prices confer an advantage to natural gas?," Energy Policy, Elsevier, vol. 110(C), pages 210-221.
    11. Growitsch Christian & Nepal Rabindra & Stronzik Marcus, 2015. "Price Convergence and Information Efficiency in German Natural Gas Markets," German Economic Review, De Gruyter, vol. 16(1), pages 87-103, February.
    12. Devine, Mel T. & Russo, Marianna, 2019. "Liquefied natural gas and gas storage valuation: Lessons from the integrated Irish and UK markets," Applied Energy, Elsevier, vol. 238(C), pages 1389-1406.
    13. Dukhanina, Ekaterina & Massol, Olivier & Lévêque, François, 2019. "Policy measures targeting a more integrated gas market: Impact of a merger of two trading zones on prices and arbitrage activity in France," Energy Policy, Elsevier, vol. 132(C), pages 583-593.
    14. Emilie Alberola & Julien Chevallier & Benoît Chèze, 2008. "The EU Emissions Trading Scheme : Disentangling the Effects of Industrial Production and CO2 Emissions on Carbon Prices," Working Papers hal-04140795, HAL.
    15. Zugang Liu & Anna Nagurney, 2009. "An integrated electric power supply chain and fuel market network framework: Theoretical modeling with empirical analysis for New England," Naval Research Logistics (NRL), John Wiley & Sons, vol. 56(7), pages 600-624, October.
    16. Abdullahi Alim & Peter R. Hartley & Yihui Lan, 2018. "Asian Spot Prices for LNG and other Energy Commodities," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    17. Misund, Bård & Oglend, Atle, 2016. "Supply and demand determinants of natural gas price volatility in the U.K.: A vector autoregression approach," Energy, Elsevier, vol. 111(C), pages 178-189.
    18. Lovcha, Yuliya & Perez-Laborda, Alejandro, 2020. "Dynamic frequency connectedness between oil and natural gas volatilities," Economic Modelling, Elsevier, vol. 84(C), pages 181-189.
    19. Abdullah Almansour and Margaret Insley, 2016. "The Impact of Stochastic Extraction Cost on the Value of an Exhaustible Resource: An Application to the Alberta Oil Sands," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    20. Madina D. Sharapiyeva & Kunanbayeva Duissekul & Nurseiytova Gulmira & Kozhamkulova Zhanna, 2019. "Energy Efficiency of Transport and Logistics Infrastructure: The Example of the Republic of Kazakhstan," International Journal of Energy Economics and Policy, Econjournals, vol. 9(5), pages 331-338.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:2011/143. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Akshay Modi (email available below). General contact details of provider: https://edirc.repec.org/data/imfffus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.