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Sunday, August 25, 2019

Oil and gas correlation Essay Example | Topics and Well Written Essays - 250 words

Oil and gas correlation - Essay Example However, the US domestic production of gas had just picked up and was at the boom phase rendering gas prices low. This means that the global prices of gas were significantly affected downwards as the oil demand plummeted hence the increased price disparity between the two commodities. It is also evident that from 1991, the import of oil by US had reduced but this still represented approximately 40% of the consumption by US against a paltry 5% of gas consumption by the US (YeÃŒ pez-Garcia, Rigoberto , and Julie 86). This is an evident case to support the observed negative correlation. It is also worth to note that the global oil prices are volatile in regard to world market trends, Middle East socio-economic issues and OPEC whims. The increasing technological advancement and campaign for more efficient machines is slowly increasing the use of gas. This means that gas fuel consumption trend will begin to gain influence in the value of dollar hence closing the demand gap it has with the oil. It is also possible that increased exhaustion of gas wells by the US will significantly push the gas prices up as there will be a plan to import more and reserve the domestic stock. YeÃŒ pez-Garcia, Rigoberto A, and Julie Dana. Mitigating Vulnerability to High and Volatile Oil Prices: Power Sector Experience in Latin America and the Caribbean. Washington, D.C: World Bank, 2012.

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