BOSTON ( TheStreet) -- Natural gas prices, long thought to be correlated to oil, have diverged in recent years, fueled by lower production costs and new forecasts of greater-than-expected global shale reserves. As shown in the graph below (with futures prices displayed for 2012 dates), prices for both fuels were severely hurt by the Great Recession, yet crude oil prices have been on a steady ascent, while natural gas is stagnant.One of the oft-quoted pieces relating to the relationship between the two fuels is a white-paper from 2007 put out by the Federal Reserve Bank of Dallas. The report, "What Drives Natural Gas Prices?", discusses various metrics used in the energy industry to relate the pricing between natural gas and oil. One metric, called the 10-to-1 rule, states that a barrel of oil should be worth 10 times that of natural gas.
Can Natural Gas Prices Recover?
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
More than 30 investing pros with skin in the game give you actionable insight and investment ideas.