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News Link • Energy

U.S. Has A Natural Gas Problem: Too Much Of It

• http://www.npr.org, by John Ydstie
 

There's a boom in natural gas production in the United States, a boom so big the market is having trouble absorbing it all.

The unusually warm weather this winter is one reason for the excess, since it reduced the need for people to burn gas to heat their homes. A bigger reason, however, is the huge increase in gas production made possible by new methods of coaxing gas out of shale rock formations.

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.

1 Comments in Response to

Comment by Powell Gammill
Entered on:

Lower prices you Keynesian pukes!


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