Natural Gas is Ridiculously Cheap
Even though “Brent Crude” is getting cheaper, it’s still a heck of a lot more expensive than natural gas…
In last Saturday’s “Chart of the Week,” we highlighted the budding downtrend in Brent Crude. While most Americans only know our domestic “West Texas Intermediate” price, “Brent Crude” is a better measure of what the rest of the world is paying for oil. Right now, it’s paying around $107 per barrel.
#-ad_banner-#Brent’s triple-digit price level is making natural gas one of the world’s great “energy bargains.” Like its energy cousin oil, natural gas has many uses. It’s used as a building block to make chemicals, fertilizers, and plastics. It’s also used to fire power plants and heat homes and factories. And it’s becoming widely used as a motor fuel.
You can expect all of these uses to increase. In just the past 10 years, America has gone from expecting to import natural gas to boasting the world’s largest supplies. Advances in drilling technology are allowing energy firms to find more and more of the stuff every day. The U.S. is now “the Saudi Arabia of natural gas,” which has resulted in a flood of cheap gas.
You can see this cheapness with the “Brent Crude/natural gas ratio.” This ratio compares the prices of these energy cousins. Years ago, this ratio drifted between six and 10. Sometimes, the ratio would even spike to 14, which indicated really cheap natural gas. But just recently, the ratio spiked to 32. Gas is ridiculously cheap, which is why we’re going to start using a lot more in America.