Report: Now Unprofitable for American Companies to Drill for Oil, Natural Gas
Photo via World News
The era of frenzied drilling for oil and natural gas in America has passed. Or in other words, "the great American drilling boom is over." That's the lead from a report in the New York Times today about how plunging prices of oil and natural gas are forcing companies to shut down their pumps and close up their rigs. Looks like those intent on drill, baby, drilling are out of luck, at least for the time being. The decline is drastic indeed. According to the Times,
The number of oil and gas rigs deployed to tap new energy supplies across the country has plunged to less than 1,200 from 2,400 last summer, and energy executives say the drop is accelerating further.
Global oil prices and American natural gas prices have plummeted two-thirds since last summer. Not even an unseasonably cold winter drove down unusually high inventories of natural gas.
The drop has been good news for American consumers, with gasoline now selling for $1.92 a gallon, on average, down from a high of $4.11 in July. But the result for companies is that it is becoming unprofitable to drill.
One company, for instance, has cut its number of operating rigs from 35 to 8.
Things are similar in the natural gas department--a massive drop in price combined with the fact that there's already a huge stockpile has led to a huge decline in drilling.
So—good news or bad news for the environmentally inclined? Well, less drilling in the US—good news. But, the inevitable reliance on foreign exporters—bad news. And, the possibility that when the economy recovers, we'll have to rely even more heavily on foreign exports as energy companies inevitably rush to man their drills once more (not to mention that prices will spike again)—bad news. The possibility that the market may widen for renewable energy sources, and that people will further see how imprudent it is to rely on oil and gas commodities—good news. The fact that—man. I'm exhausted already. What do you think?