While around 60 percent of oil is traded internationally, for gas the figure is only 17 percent. Also it is clear that gas unlike oil does not trade in an international market. This is evident from price patterns. Internationally traded commodities show price convergence between geographic regions. Hence the prices of crude oil track each other very closely whether in Asia- Pacific, the Persian Gulf, the Atlantic Basin or in North America.
Arbitrage quickly adjusts price anomolies as physical supply follows any regional differentiation.
By contrast, gas prices are essentially regional with differing regions shows widely differing patterns. The Centre for Energy, Petroleum and Mineral Law and Policy. All Rights Reserved.