The combination of weaker-than-anticipated winter heating demand in the world’s biggest economy and a freak industrial outage that buried the domestic gas market in excess supplies has gutted prices for the furnace and power-plant fuel. It’s a dramatic turnaround from just six months ago, when fears of impending shortages as the coldest time of year approached drove prices to a 14-year high.
But shale explorers like Chesapeake Energy Corp. are faced with a grim choice: keep drilling new wells to expand output, further drenching the country in supplies, or idle rigs and risk losing workers in one of the tightest labor markets in history. The reversal in gas’s fortunes has been, above all, the result of mild winter weather in the biggest US metropolitan areas that sapped demand at a time of year when consumption normally surges. At the same time, an explosion that shut a Texas gas-export complex last summer prevented many shipments of the fuel from heading to overseas market, triggering a backup of supplies into the domestic market.