Thursday, September 6, 2007

We have too much gas

According to the Wall Street Journal today, Natural-Gas Producers Cut Output because we have too much gas.
Amid an abundance of natural-gas supplies and soft prices, gas producers are starting to pull the plug.

Gas prices have been dropping, and so producers are dialing back their output. Is this just the consequence of market forces working their magic (e.g. prices have been high the last few years, so demand has dropped), or an annual seasonal effect in the for which gas demand is low this time of year? Having an abundance of gas and dropping prices stands in stark contrast with oil, where prices are well over $70/barrel again (see here: Energy Prices).