Pennsylvania

Energy. Environment. Economy.

The Downside Of Cheap Natural Gas

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Natural gas prices have rallied in recent weeks, but the commodity is still selling for relatively low levels, due to the domestic glut created by shale drilling

While low natural gas prices are great for consumers, they aren’t necessarily good for the energy industry itself. For example, the pace of natural gas drilling in Pennsylvania  slowed down over the past year, as natural gas prices dropped to their lowest level in a decade.

Natural gas prices are starting to inch back up, but the commodity is still much cheaper than it used to be. The Wall Street Journal takes a look at how cheap gas is hurting parts of the energy industry:

But lower prices for coal and gas have resulted in lower revenues for some energy companies, prompting them to cut back on gas drilling and coal mining, though that could resume once prices strengthen, as many experts expect.

In a handful of states, while consumers and many businesses are benefitting, some local and state government tax collections are being impacted. The budgetary squeeze is particularly acute in West Virginia, where rich reserves of coal and natural gas have long been a key source of revenue.

In September, Arch Coal Inc. ACI -3.47% idled a local coal mine here that employed 50, and natural-gas producer Chesapeake EnergyCorp. CHK -3.76% laid off 115 workers at a field office here earlier this month, relocating many of them to Ohio where its drilling is more profitable and where jobs and revenues continue to grow.

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