January 7, 2014 – Energy Intelligence Finance, Vol. XXXVIII, No. 1
“How Cheap Oil Changes Economics for Petchem Investors”
For the past five years, oil and chemical companies have been making multimillion and billion-dollar investments in new petrochemical plants and reopening and upgrading existing ones in the expectation that the price of natural gas would remain a small fraction of oil prices (EIF May14’14).
These investments have been made on the assumption that oil prices would forever be at least 20 times those of natural gas, if not more, well into the future. The days of $100 per barrel of oil and $3 per million Btu natural gas, however, are over, at least for the foreseeable future, says RBN Energy’s Rusty Braziel.
“The days when investors can rely on dirt cheap gas relative to crude are behind us,” Braziel posted on RBN’s blog. “Put more succinctly, no longer can you believe — with any pretense of intellectual honesty — that over the long run gas prices will be dirt cheap relative to crude oil. And that impacts just about everything that touches energy markets.”
Read the full story here: http://www.energyintel.com/pages/login.aspx?fid=art&DocId=872645
*reproduced with permission from Energy Intelligence
