Gas is booming. Prices should be dropping everywhere, right? Wrong
I’ve spent the last part of 2013 writing about how significant natural-gas-production growth is in the lucrative geologic formation deep under northern Appalachia, including Pennsylvania.
I even hesitate to say its name, because hearing the M-word is getting old.
If recent federal Energy Information Administration statements on gas production were turned into a drinking game and everyone had to take a shot each time the word “Marcellus” appeared in a positive context, I don’t think anyone would be capable of walking away from the table.
So the rules of supply and demand should mean that the price of natural gas should be continuing to drop for everyone in the commonwealth, correct? Turns out, not necessarily.
I give you exhibit A: Many residents in western Pennsylvania will be greeted in 2014 with bill increases. And it’s because of the price of the gas itself, according to the report I saw this morning.
How can this be? Well, I’m not exactly sure, but I suspect it might have something to do with Pennsylvania not being the only market for the produced gas.
Yes, the report I saw today also notes that the price of gas is still lower than it was a few years ago. But a price rise of any kind is trending in the wrong direction when production is also going up.
When the risks of natural-gas production from fracking in Pennsylvania are shouldered by its residents, the more production goes up, and the less they should have to pay. It’s a simple cost-benefit, supply-demand statement.
The commonwealth’s New Year’s resolution should be to make sure that actually happens in 2014. For the sake of everyone in Pennsylvania — including business interests that will benefit from dropping natural-gas prices.
Should benefit, I should say.