Someone asked me why the price of natural gas is related to oil prices, and why there are situations where oil prices fall while natural gas prices rise instead? I think I've explained this before, but let me go over it again.

The main reason is that the price of liquefied natural gas (LNG) is not on the same level as the price of natural gas extracted directly from the source. If you follow international energy futures, you'll see the logic:

1. The Source and By-Product Nature of Natural Gas

Some of the natural gas produced in the U.S. comes from dedicated gas fields, but a large portion is "associated gas." In other words, when the U.S. produces shale oil, oil and gas are co-produced; the gas is a by-product.

2. Environmental Policies Changed the Handling Method

For many shale oil producers, natural gas is actually a by-product. In the past, if the cost of building pipelines to transport this gas was too high, oil fields would simply vent and burn it. However, due to environmental concerns, this practice was later banned, and the gas must now be transported and stored.

3. The Transmission Mechanism of Supply and Demand

(a) When oil prices remain persistently high: Oil fields increase production, leading to a significant surge in the output of associated natural gas as a by-product. Due to the high cost of LNG, a large amount of cheap associated gas floods the market, causing supply to exceed demand and driving down natural gas prices.

(b) When oil prices fall significantly: U.S. oil fields have relatively high production costs, so they reduce output. Consequently, the production of associated gas also drops sharply, pushing up domestic natural gas prices in the U.S.

Also, a friend previously asked: AI requires electricity, so which is better—natural gas, solar PV, or nuclear?

I can only say that if you're aiming for the equipment that can "generate electricity the fastest," natural gas power plants are definitely the quickest to build.

Considering these two factors, I think now is a relatively good time to position for natural gas. However, a core issue must be noted: the large-scale deployment of natural gas into the AI energy sector is still largely just a concept at this stage, even a fantasy.

The core bottleneck isn't the supply of natural gas energy, but rather the power grid, gas turbines, and their core components. Although related companies are currently the biggest beneficiaries, it will still take a long time (at least until around 2027-2028) before these turbines are actually generating electricity and substantially driving U.S. market demand for natural gas.

Therefore, there's no need for overly high expectations regarding natural gas prices at this stage.

As for the series of liquefied natural gas (LNG) processing and export facilities currently under construction, they have long-term value. But for now, we can set that aside. Let's first secure a solid arbitrage play on the natural gas concept during this period of oil price decline and stabilization.