End Financial Engineering for Natural Gas

Physical markets for natural gas are not only possible, they are already available. The ICE has introduced physical markets for 16 delivery points in the United States, including the benchmark Henry Hub in Louisiana.

Turning back the clock on financial engineering will be difficult, but it's necessary if we are to ensure that natural gas will have fair, honest pricing based on real supply and demand.

With crude oil and its associated products, the horse has already left the barn. The chances are slim that regulation will restore honest pricing, untethered to investment interest, the dollar trade or the latest algorithmic pattern.

But with natural gas, we still have a chance - a chance to recreate a market that will create prices that can be relied upon as barometers of real fundamental influences. This should be Washington's focus as it seeks to understand commodity derivatives.

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