What's Behind the Gas Price Formula

UNLIKE the price of crude oil, which is agreed by the Organization of Oil Exporting Countries (OPEC), the price of gas is determined through a formula. So for each contract, there's one formula. There are several reasons why a formula is used to set gas prices. The main one is that because gas is a commodity, long-term gas contracts need to be protected from fluctuations that are too large.

This formula refers to the market price of crude oil

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