Quote:
Originally Posted by Slava
How long can that last though? With all of the shale gas now it makes me wonder how stable the prices are for the next few years?
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Well LNG is really a different beast than local North American gas business. Essentially the beauty of LNG is that due to their portability they get to arb price differentials between different terminals in different continents, which can be a big advantage. If you're a student of real options, this is a perfect example.
As for North America I believe that something has to increase substantially on the demand side in order to keep a longer term price level of $6-7/mcf or higher. If I were a gas producer I would thank my lucky stars for the cold winters the past two years. The only thing on the horizon that might be a game changer is GHG legislation changes. Many gas bulls believe that it will come from destruction of coal demand in such a scenario.