The Pickens Plan
Houston Chronicle: There’s a fancy term for what would fix much of what ails the nation’s until recently booming natural gas industry: market equilibrium. There’s too much gas and not enough demand.
Clearly, what’s called for are Goldilocks prices for natural gas. Not too high. Not too low. Just right. Above all, predictably stable.
We can dream.
For now, however, natural gas is in a price slump that is gradually forcing producers to shut down wells and cut their plans for future production. Chesapeake Energy, one of the industry’s giants, is the latest to pull back. The Houston Chronicle has detailed Chesapeake’s decision to cut by half, from 200 to 100, the number of rigs that will be drilling for natural gas, while cutting its exploration budget by 83 percent.
A headline like this one is something of a puzzler amid the media buzz about the abundance of domestic natural gas that has become accessible in the nation’s vast shale rock formations.
Alas, that abundance is part of the problem, at least for the moment. Seeking a solution to that disconnect between natural gas supplies and markets that have seen gas prices stuck at or below $3 per million cubic feet is a process that will require the best thinking of government policymakers, the industry and entrepreneurs.
The transition to natural gas as a fuel source is well under way in our nation’s electric power industry, but the process is by definition a lengthy one.
The biggest disappointment in the policy area is Washington’s failure to pass the Natural Gas Act, better known as the Pickens Plan, which would convert our nation’s fleet of nearly 2 million 18-wheelers from diesel to natural gas over a period of years.
Failure to move on this borders on policy negligence by our national lawmakers, especially in light of the greatly enlarged domestic gas resources accessible thanks to fracking and horizontal drilling.