Thursday, August 20, 2009

Good Deflation for Some...

Here's a quick article/post from the L.A. Times noting the depressed price of natural gas. In characterizing the sinking price of gas, I'm glad they put the "good" in "good deflation" title in quotation marks. The content of the article notwithstanding, it is important to remember the basic tenants of economics still hold: when the price for a crucial good goes down, someone benefits. It's a shame that it's the utilities that are the chief beneficiary. They largely make their money on a cost-plus basis. They profit when prices are up and when prices are down and have little incentive to lock in low prices to benefit their rate payers.

Another takeaway point of the article (although unstated) is the decreasing importance of hurricanes to natural gas prices. Since most of the new gas production is inland, Gulf of Mexico storms will not significantly interrupt natural gas flows. A very large percentage of our nation's oil, however, still comes from the Gulf, and an even larger percentage of our refining capacity is within 100 miles of the coastline, so our national energy security is still in danger. Just not so much natural gas.

3 comments:

rplilar7 said...

Any status on S13 T11(N) R16(W) Desoto Parish. Thanks much

Robert Hutchinson said...

rplilar7, please email me at haynesvilleplay (at) gmail.com. I will send you some data that is too cumbersome to post here.

RH

Robert Hutchinson said...

The short answer is that there is no action in the T11/R16 quad but there is some drilling in the next quad to the east and a well is being frac'd near your section. Email me at haynesvilleplay (@) gmail.com and I'll send you a list of the wells and a map.