The Economics of Natural Gas

ABSTRACT\r\nNatural gas has long been a vital energy source, but in recent years, it has increasingly gained significance as a financial asset.\r\nThe growing use of financial derivatives, the trading mechanisms developed in regulated markets, the inclusion of natural gas in\r\nwell-diversified portfolios, and events such as the Russia-Ukraine war have been key drivers of this trend. The aim of this paper is\r\nto systematically review the economic and financial aspects of natural gas. By analyzing 126 papers published between 1997 and\r\n2024, we examine the supply-demand balance of natural gas, the significance of the forward curve and its relationship with spot\r\nand future prices, hedging mechanisms, interconnections with oil and other asset classes, potential diversification benefits, and\r\nthe most important regulatory aspects. Additionally, we propose several questions to guide future research in this field.