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To: Jeff Jordan who wrote (410951)	10/12/2010 1:21:54 PM
From: Horgad	1 Recommendation Respond to of 436258

Not really directed towards you, Jeff. Your post just triggered some thoughts so I am venting them. <g> I have been doing some more puzzling on the US natural gas market as I watch it continue to plunge below production costs and watch the historical oil/n. gas ratio get obliterated beyond comprehension. The old often repeated theory is that these new huge fracking natural gas leases require the companies to start extracting or they lose the lease. So they extract a little bit now even if for a loss in anticipation of large profits later. But what I am starting to understand now, is that high oil prices are causing low nat. prices and that the "crazy" movement in the oil/n. gas ratio actually makes some sense. As oil prices increase, the price of Natural gas in the US is being driven more and more by oil fields in the US that are producing nat. gas as a by product that they can afford to give away at any price. So here I am expecting high oil prices and inflation to eventually push nat. gas up as people choose nat. gas over oil and nat. gas production slows because it is unprofitable, but instead all of that is being overshadowed (so far) by increased oil prices and the resulting increased oil production in the US... To change that story it will take 1. a significant increase in nat. gas use in the US or 2. a large enough drop in world oil prices to make US fields unprofitable again or 3. someone figuring out how to efficiently export nat. to the Chinese or 4. exhaustion of the currently profitable oil fields in the US None of this seems likely to happen soon. In fact things could get much worse before they get better if the world oil price in dollars keeps rising (and who thinks it won't?). As always in IMHO... Also, "Chinese buy third of Chesapeake South Texas field (2 billion dollar deal)" finance.yahoo.com Also, Short term I'm open to the possibility of a dollar bounce, oil down, nat. gas up scenario.