What Oil and Gas are Telling Us Now

Right now, oil and natural gas prices are stretched to their limits.

Rarely before in history has oil been so expensive while at the same time, natural gas prices so cheap.

You can see this price differential in effect by looking at this chart, which divides the price of one barrel of oil by the price of one million british thermal units (mmbtu) of natural gas:

It’s helpful to use these types of ratios – that is, the price of one commodity divided by the price of another – to scrub out dollar and currency market fluctuations. It gives you a purer look at the actual relative value of one commodity vs. another.

The only other time natural gas was as relatively cheap to oil as it is right now happened in last half of 2009.

And in just four months, natural gas prices doubled: (more)