Gas price parity is defined (as a percentage) as the relationship between gas prices compared to oil prices.
Parity = Gas Price divided by oil price * conversion factor
When oil is at $100 a barrel, gas price parity with oil would equate to around $17.2 per million British thermal unit of natural gas.
Some gas exporting countries believe that natural gas is too cheap and should be the same price as oil. These entities explain that gas is often more expensive to produce and has added qualities, such as environmental, to oil. Already the market for Asian long term LNG contracts is trending towards oil-price parity.
During certain periods, natural gas prices have been seen to follow the price of crude oil very closely, so that for instance in July 2008 when oil was $144/bbl the price of natural gas reached a peak of $13.69 mmbtu and when oil came crushing down within six months, thus natural gas fell to $3 mmbtu, a fall of 80%. However, over the last couple of years this link has been severed and oil and gas trade based on their own unique fundamentals