If natural gas prices drop too low, there won’t be any natural gas?
Washington Post energy reporter Brad Plumer writes in “Is cheap natural gas always a good thing?“:
… But is cheap natural gas always an unmitigated blessing?
Not necessarily. For one thing, as Dan Stumpf notes, natural gas prices are in freefall right now, thanks to a frenzy of shale-rock fracking and an unnaturally warm winter that is depressing demand. At some point in the future, presumably, the price could go so low that gas companies no longer find it profitable to keep producing…
Egad, Brad. Then as supply tightens but demand remains, prices will rise again and gas companies will begin to produce more. Then prices will fall again as supply grows, and rise again when supply tightens. It’s all based on supply-and-demand. It’s called a market.
Prices are neither universal blessings nor universal curses. They are information about market conditions. What’s good for consumers is not necessarily good for producers and vice-versa.
Plumer ends his blogging with his real agenda — climate alarmism and green energy:
Meanwhile, from an environmental and climate perspective, rock-bottom gas prices aren’t always a net plus. True, cheap gas is helping to drive older coal plants into retirement right now — and, since burning natural gas for electricity emits just half the carbon that burning coal does, that’s a huge gain from a global-warming perspective. But on the flip side, the gas glut could also undercut the development of wind, solar, carbon capture and other clean-energy sources. As Mason Inman reports, a recent MIT study examined different emissions and policy scenarios and found that ultra-cheap natural gas could crowd out other forms of energy — eventually leading to higher emissions and making climate targets harder to meet. So there’s no easy, pat answer here.
Markets are inconvenient and apparently unfathomable for the central planners and rentseekers among us — but they work whereas the other two don’t.