Supply and demand at work

Supply and demand at work

Charleston (W.Va.) Gazette on Marcellus shale drilling: Supply and demand affect the development of the Marcellus shale. The ability to tap deeper shales increased the supply of natural gas to the point that prices are a third what they were just four years ago.

The national count of active new gas drilling rigs fell to 775 in February, roughly half what it was in 2008.

A new focus

But activity in West Virginia is expected to continue as companies focus on “wet gas,” which fetches a higher price because its ethane content can be cracked into ethylene, a feedstock for the chemical industry.

That feedstock is cheaper than oil, which could mean a drop in demand for oil, which theoretically should lead to a drop in gasoline prices.

The energy business is complicated, but the answer to high prices remains drill, baby, drill.