Oil collapse fails to dent zeal for hub-based gas pricing

European utilities remain eager to move away from oil indexation

Gas pipeline
Since the collapse of oil prices, the economics of oil indexation have been turned on their head

For decades, a debate has raged in Europe over the best way to price natural gas. Unlike in the US, where gas prices are determined by activity in traded gas markets, Europe has retained the practice of pricing long-term contracts using oil, in spite of vehement opposition from buyers.

In the past few years, a combination of rising oil prices, falling gas prices and more liquid European gas hubs caused a move away from oil indexation and towards hub-based pricing. A tipping point was reached in