An Odd Problem For The United States: Too Much Natural Gas

NPR takes a look at the consequences of the United States’ glut of natural gas:

Peter Ricchiuti, a professor at Tulane University in New Orleans and an expert on oil and gas production, says the normal supply-and-demand laws of economics aren’t working as they used to in the industry.
“Historically, this has always been kind of a self-governing mechanism,” Ricchiuti says. “When natural gas prices got too low, you’d start to see the industry lay down rigs until prices went back up again, and it was very effective. It was sometimes jokingly referred to as the ‘Redneck OPEC.’ ”
OPEC refers to the Organization of the Petroleum Exporting Countries, a grouping of the world’s major oil producers.
That’s not happening this time, and Ricchiuti says there are a couple of reasons the industry isn’t responding as usual to price pressures. One reason is that during the shale gas explosion of the past few years, production companies spent big bucks leasing mineral rights in vast shale gas areas from Pennsylvania to Texas.

Editor's Picks