Que, The whole issue of demand destruction, even permanently, doesn't really bother me that much. In one sense it probably shoulda started happening a coupla years ago.
In Trinidad I bet you can profitably find & produce gas for about a buck & half an mcf. Now if you are looking for a place to put a fertilizer plant, what makes more sense, the US or Trinidad? Sure, you have the extra shipping costs of the product to get it to the US market, but if natgas prices are at their appropriate economic equilibrium point, then it should be a no-brainer to go to Trinidad.
By E&P companies paying attention to the bottom line for the first time, instead of the top line, North American natgas prices are gonna finally get to their appropriate economic equilibrium point. Yes Big Dog, the "suits" are actually doing the right thing here IMO.
The thousands of workers in the fertilizer and chemical industries that are gonna move down where there's cheaper gas are not gonna feel too good about this, but IMO its for the best for all concerned.
If this theory is correct, we are entering an era of high natgas prices but probably will not ever again need all the rigs that we have in this country. Demand for natgas will be lower due to the high prices, and supply will be lower due to the "suits" not letting the exploration guys go nutty drilling stupid (i.e. uneconomic) projects.
Sorry Que, I still don't see them 1,000 gas rigs, even with $5+ gas. |
