Technical University Munich Commodities as an Asset Class - risklab

2.1 The different Commodity Types
in the same way like petroleum and occurs to 30% in combination with its liquid
brother and to 70% in independent fields. Figure 2.5 shows its price and net consumption
development over the last 35 years in the scale of oil equivalent for better
comparison.
Figure 2.5: Natural Gas Price and Net Consumption
Natural gas prices are by far not that volatile as crude oil prices are and are by
far not that reactive to political queries because it does not have the importance
in world’s industry, yet. It can be seen as a substitute to crude oil what is getting
specially in an high oil cost environment more popular. Its major drawback to
petroleum is that is comes as a gas. Therefore, its volume is thousand times that of
its liquet brother. Since the 1960s there exist procedures which cool down natural
gas until it goes over into the liquid state of aggregation. In this form it can be
stored and shipped or driven to its place of destination. This procedure is more
complicated and cost intensive as the storage and transportation of oil. Therefore,
the industrial use of natural gas becomes economically justifiable only in a high oil
cost environment.
As we’ve already mentioned, there are different movements to switch from oil based
products to alternative energy sources what explains the higher consumption growth
rates of 2.5% on average over the last 10 years in comparison to crude oil which usage
has been grown on average 1.7% over the last 10 years. 15 Natural gas can be used
to substitute traditional heating and electricity sources. Many households already
started to switch their heating fuel from oil to gas what increased its demand. Over
this, car manufacturers are working to get fuel cell based motors ready for commercial
use. First test series have been successfully but bulk production stills needs
15 See [BP Report 2006].
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