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Producers ignore low natural gas prices

Scott Tong Aug 26, 2010
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Producers ignore low natural gas prices

Scott Tong Aug 26, 2010
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BOB MOON: Looking for a bargain commodity investment? Natural gas is cheap — prices are down 18 percent this month.
Which is good for buyers, consumers and power plants. Not so good for producers.

From the Marketplace Sustainability Desk, Scott Tong reports.


SCOTT TONG: Natural gas prices typically fall in the… fall, because we use less air conditioning. That’s because natural gas is one of the fuels that produces electricity. On top of that, this year factories filling fewer orders are expected to use less to the juice, too. Natural gas prices are at three-month lows. But are producers paying attention?

Raoul LeBlanc at the advisory PFC Energy says nope.

RAOUL LEBLANC: Drillers, the oil and gas companies, the producers continue to ignore the market signals and drill, drill drill.

Oversupply and weak demand pushed gas futures yesterday below $4 a unit — the standard unit is a btu.

But economist Gilbert Metcalf at Tufts thinks prices will come back.

GILBERT METCALF: Once this recession ends, we can expect that gas prices would go up to the $5-6-7 range, which is historically where they’ve been.

Hurricane season could also push prices higher — if a storm disrupts offshore natural gas supplies.

In Washington, I’m Scott Tong for Marketplace.

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