A quick graph I put together earlier tonight looking at the price of natural gas on an equal-BTU-basis compared to oil. The blue line shows the price of natural gas, while the red line shows what the price of natural gas might be if it traded off oil at the same $/million BTUs. (For the curious, the ratio is 6:1, meaning that the price of natural gas ought to be one-sixth the price of oil, in equal-energy terms.)
The spread between the two is not far off the widest levels ever, as measured in percentage-of-difference terms. Part of this is the non-fungibility of the two sources, of course, with there no true arbitrage at the consumption end (i.e., you can’t costlessly substitute natural gas for oil), except in limited cases. It has also to with recent bearishness about natural gas given the alleged potential for new U.S. supply. Either way, the discount spread is sitting at epic levels.