Financial Times: How to push world gas prices down to US levels

One of the first concepts introduced to yawning undergraduates in their economics courses is the Law of One Price, that is, that in efficient markets all identical goods must have one price. Sadly for the continuation of industrial Europe, and even in less market-efficient Asia, natural gas seems to have overslept and missed the introductory lecture.

The US and Canada, populated by overweight people with defective public schools, who then go on to put annoying bumper stickers on their excessively large autos, are getting ever-cheaper energy and increasing their share of manufacturing. That is not fair, is it? After all, in the second part of that first economics lecture, the instructor will say that if simple old natural gas, CH4, methane, is priced differently, then speculators will move it from one place to another, driving the price differential down to the minimum required by transport costs. Instead, the same unit of gas was selling last month for $3.47 in Louisiana, $10.50 in Spain, and $12.75 in coastal China. Given that it costs perhaps $3 at the most to ship the stuff, what happened to that Law of One Price? Is this another example of “market failure” that the underpaid Trotskyite instructor thinks should be solved by more aggressive public policy? Should we just give up on Economics 101, and switch over to the Media Studies course in the same time slot that looks more fun?  MORE