Natural Gas: One Commodity, Three Prices

US natural gas prices are cheap relative to the rest of the world, at about $4 per million British thermal units. In Europe, gas is trading at double this price, while in Japan gas in its liquefied, imported state costs as much as $15.

With world prices so disparate, trading houses are positioning themselves to export liquefied natural gas from the US should the US government open up the export market.

The reason for inexpensive prices in the US is the shale gas revolution. Last year in spring, US natural gas prices hit a 10 year low of around $2.

The larger context. What is happening to other commodity prices?

Corn is down 21% from its peak price of $8.43 per bushel on Aug. 10, 2012.

Gold is down 27% from its peak price of $1,920.30 per troy ounce on Sep. 6, 2011.

Copper is down 31% from its peak price of $10,190.00 per tonne on Feb. 15, 2011.

Brent oil is down 34% from its peak price of $147.50 per barrel on July 11, 2008.

Looking forward. What can we say about future inflation?

If history were to repeat itself, we could see 80% inflation at the CPI level in the next 5 years, according to the chart on page 10 of the following report and the discussion surrounding it. 

http://www.sitkapacific.com/files/Sitka_Pacific_Capital_Management_2013_Annual_Letter.pdf

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