WSJ: Why Obama's Call For Expanded Gas Drilling Won't Be Answered

The Wall Street Journal is providing a reality check to President Obama’s call for expanded natural gas drilling.
The paper’s take: that simply isn’t going to happen as long as natural gas prices stay at their current low levels. (Here in Pennsylvania, we’ve already seen Chesapeake and Consol scale back their Marcellus Shale drilling operations.)
As we’ve reported, cheap gas prices are great for consumers. The WSJ explains why they’re curbing energy companies’ enthusiasm for more drilling:

The success of the exploration and production, or E&P, sector in developing America’s unconventional gas has crushed prices. This is good for bill-paying voters, so the White House would like to encourage it. Problem is, what is really needed is more demand. The oil price is now about 40 times the price of gas. On an energy-equivalent basis, oil should be only six to 10 times higher. The market is saying use less oil and more gas.
Unfortunately, that is easier said than done. The anticipated switch from coal-fired electricity to more derived from gas is proving gradual. Increased gas exports, if they happen, remain years off. Converting vehicles to run on natural gas is another strategy. But Joe Petrowski, chief executive of fuel distributor Gulf Oil, estimates there might be an extra 300,000 gas-fueled vans and trucks on the road this year, boosting gas demand by just 2%.
If gas is to strengthen anytime soon, it won’t be due to surging demand, but reduced supply.

How important are gas prices to energy companies’ health? Our friends at StateImpact Texas dug up a chart showing how Chesapeake’s stock prices rise and fall alongside natural gas prices.

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