Natural Gas and Oil BTU price converge

NYMEX Natural Gas pricing for January & February Delivery are an unusual position. For the past few years, producers of Natural Gas have bragged about how much cheaper Natural Gas is to Crude Oil on a $/mmBTU basis. As of the closing of the NYMEX pit session on Tuesday,
10/27/04, January Crude settling at $52.17/barrell converts to $8.995/mmBTU. January Natural Gas settled at $9.435/mmBTU. That puts the price of Natural Gas now at a Premium instead of a Discount. What incentive will energy providers and industrial users have to make the “switch” to Natural Gas under this type of pricing? It’s obvious that the players that payed between $9-$10/mmBTU for a delivery of Natural Gas in January of February are scratching their heads wondering where the “savings” are. Now with the price of Crude coming down, the disparity will widen unless the Natural Gas market can somehow resolve it’s own “irrational exuberance”.