Michael Giberson
Over at the Oil Drum appears an article under the heading, “Gas Boom Goes Bust.” The author compiles many data charts – big picture, close-up, long run and short, etc. – quotes a few other writers and a few headlines, and eventually arrives at this conclusion:
The bottom line is that natural gas is a cyclical industry which recently enjoyed a very large boom. As night follows day, a bust is sure to come. Based on the information presented above, I would humbly submit that it has just arrived.
Among all of the charts and graphs, I take the essential points to be that some natural gas developers, including some important ones, have employed financial strategies enabling them to avoid the harmful consequences of low gas prices so far, but gas prices are now so low and projected to stay low for so long that these strategies are no longer available. The author expects to see some developers in bankruptcy court this year – evidence of the bust.
But this diagnosis seems to confuse the fortunes of a few (or even many) businesses with the outlook for the market. The natural gas boom was never about the fortunes of individual natural gas developers, it was about the ample supplies of natural gas coming into the market.
Companies may well go bust, but the gas boom itself continues.