Natural gas and oil prices are influenced by a number of issues, partially psychological in nature (speculative investments, perceived risks, government interference in oil and gas markets in the form of subsidies) and partially due to economic, political or technical factors (higher demand, tight capacity along the whole chain of supply – transport – storage – refining and the threat of interruptions). Issues on the supply and demand side that influence pricing also include weather (hurricanes that reduce supply, summer that increases road transport and the use of air-conditioning), geopolitical events in energy exporting countries, higher GDP in energy consuming countries and a host of other factors. In 2000, as natural gas was first made available in Israel at approximately $2.5 mmbtu, the price in Europe and the US averaged $3.2 and $4.2 mmbtu respectively. By 2007, the price of natural gas had increased to between $7 – $9 in the US and EU respectively, having peaked shortly to $15 mmbtu after the devastating hurricane season hit the Gulf coast of the US in the summer of 2005. During the same time period LNG costs have also shown a fourfold increase, from $2 billion to $8 billion a train. Brent crude oil which was $28.5 a barrel in 2000 hurtled past the $100 psychological barrier for the first time ever at the beginning of 2008 peaking on 11th July 2008 to $147 a barrel and decreasing after that to just above $100 a barrel by September.

Forecasts for natural gas prices for 2010 range from $4.75 per million BTUs, from Citigroup, to $9 from Sanford C. Bernstein. The disparity reflects uncertainty about a variety of factors, from whether the recent drilling breakthroughs will result in long-lasting supply growth, to whether concerns about climate change will result in a decisive move toward natural gas, which is considered a relatively environmentally friendly fuel. The end result is that while the law of supply and demand held in 2009, there isn’t any guarantee that the amount of supply or demand won’t change significantly in the future.