Oil and gas, once involved in a stable relationship, continue to grow further apart.
During the first quarter, the price gap between crude oil and natural gas widened to an extreme, as oil prices were buoyed by supply concerns amid Middle East tension while gas prices were weighed down by an usually warm winter and a supply glut in the U.S.
Historically, the relationship has been steady, with a barrel of oil trading about 11 times the price of 1 million BTUs of natural gas since 1990.. The oil-to-gas ratio started to climb in 2009 as a result of large discoveries of shale gas, and on March 27 reached an all-time high of 48.6 times.
The huge gap points to a fundamental imbalance in energy markets. Customers who burn cheap U.S. natural gas as a fuel currently enjoy a competitive advantage, and buyers of other fuels have a rising incentive to try to switch. That may eventually narrow the gap again, but it could be a costly and time-consuming process.