3.5: Summary and Final Tasks

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Summary and Final Tasks

Summary

Natural gas as an energy commodity is different than crude oil in several important ways, but markets for natural gas and oil share some important similarities as well. Like crude oil, natural gas is an energy commodity whose prices were gradually deregulated through the 1980s, culminating in full wellhead price deregulation in the early 1990s. Pricing of natural gas is determined by supply, demand, and transportation (pipeline) factors, and the natural gas market has its own distinct

North American price benchmark - the Henry Hub - just as crude oil has West Texas Intermediate as its North American benchmark (we will get more into globalization of gas markets in the next lesson). Unlike crude oil, natural gas is used directly in virtually all sectors of the U.S. economy (residences, businesses, industry, power generation), with the exception of transportation. Also, unlike crude oil, natural gas is more homogeneous but more difficult to transport, meaning that trade in natural gas is more closely tied to the availability of pipeline capacity than is trade in other energy commodities.

Reminder - Complete all of the Lesson 3 tasks!

You have reached the end of Lesson 3! Double check the What is Due for Lesson 3? list on the first page of this lesson to make sure you have completed all of the activities listed there before you begin Lesson 4. Note: The Lesson 4 material will open Monday after we finish Lesson 3.