Facebook LinkedIn Twitter

IAEE Members and subscribers to The Energy Journal: Please log in to access the full text article or receive discounted pricing for this article.

The Relationship between Crude Oil and Natural Gas Prices: The Role of the Exchange Rate

Several previous studies have found evidence that oil and natural gas prices in the United States are cointegrated. There is also evidence, however, that the relationship is unstable. One explanation is that technological changes alter the substitutability between natural gas and oil products. We reaffirm this finding, but also find evidence that the exchange rate influences the relative price of oil to natural gas in the United States. As in previous studies, we again find that short run departures from long run equilibrium are influenced by weather, product inventories, other seasonal factors and supply shocks such as severe tropical storms in the Gulf of Mexico. Keywords: Oil/natural gas relative price, Cointegration, Exchange rate, Nontraded and traded goods

Download Executive Summary Purchase ( $25 )

DOI: 10.5547/01956574.35.2.2

References: Reference information is available for this article. Join IAEE, log in, or purchase the article to view reference data.

Published in Volume 35, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.