The AP reports via the Craig Daily Press:
As natural gas prices continue to drop, the recent nationwide boom in drilling is slowing. Drillers don’t make money if prices go too low – and drilling wells isn’t cheap…
When the shale drilling boom was starting in 2008 the average price for a unit of gas was about $8. Two years ago it was down to $5.50, and now it’s dropped to about $2.50. Part of the reason is that the shale gas formations became productive more rapidly than expected, as thousands of new wells have been drilled nationwide.
Industry reports note that the national count of active new gas drilling rigs fell to 775 in early February, down from about 1,500 in 2008.
The laws of supply and demand operating as they do, the good news about the glut of nationwide natural gas production is a low price to end consumers–which should eventually grow consumption, and be good for producers as well in the long run.
Above all, notice in today’s AP story the absence of any mention of tighter regulation as a reason for reduced new drilling. In fact the word “regulation” doesn’t appear once! You’re going to want to keep this in mind when Senate Minority Leader-turned energy lobbyist Josh Penry writes his next column mendaciously blaming Democrats and regulations on drilling as the reason fewer rigs are operating in Colorado–or a “policy paper” to be read like a script at the Capitol. Seriously, being the “free market” supply and demand experts, it’s kind of laughable when energy-friendly Republicans expect their audience to cast market realities aside, and use any such supply and demand-based ebb and flow to attack political opponents.
Not that we expect the facts to slow anybody down, just keep them in mind when it happens.