Thursday, December 17, 2009

Natural Gas: The New Cash Crop

The Wall Street Journal had an interesting fin de d├ęcennie article on its web site about the changes in various commodity prices between the nineties and this decade (the aughts, naughty aughties?).  Of all the commodities analyzed, natural gas had the biggest price increase.  The average price rose from $2.70/MMBtu in the 90's to $6.50/MMBtu in the 00's.  The commodity that fared the worst?  Cotton, which dropped 39% over that same period.

It made me think of visiting our family property in rural north Louisiana as a child.  I remember driving down Highway 1 looking at the cotton fields on both sides of the road.  While driving, my father would regale us city kids with stories of cotton harvest time.  Now, driving that same route you are as likely to see as many signs of natural gas production as cotton growing.  I don't have hard agricultural figures to cite, but with the Haynesville Shale, it seems that natural gas has become the new cash crop for north Louisiana farmers.

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