Of course economics depends on price

Reader comment on: More on the NYT Natural Gas Story

Submitted by Lyle (United States), Jul 1, 2011 11:16

The American Association of Petroleum Geologists had an article: http://www.aapg.org/explorer/2011/04apr/shale0411.cfm that dealt with the economics issue. At $4 per thousand cubic feet the economics are a lot worse than at 7 or 13. But then this is part of the game in resource extraction, consider that before the Texas Governor shut down the East Texas Field in the 1930s oil fell to .2/bbl. Even back then no one made any money on it. The glut will slow drilling until production falls enough to raise the price back to an economic level unless an opec (Once upon a time Texas Railroad commission and then Opec itself) like group comes in a regulates production. In addition there have always been stock touts in business and some of the independents are nothing more than touts. After all I heard that someone at one time drilled a well into granite in S Calif on the principal that if its S Calif there must be oil there. It's like the promoter of the Denver Colorado Canyon and Pacific railroad, that thought well rivers are the flattest features around so the Grand Canyon bottom was a great place for a railroad. (Quickly disabused of the concept by floating thru it).

If we did not learn anything else in the last crisis its that people will try to sell you junk tied up with pretty ribbons, and if you don't look deeply you get what you deserve.

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