Saudi Attacks Aren't Bullish for One Energy Market
High oil prices will encourage more fracking, which will add to a glut of gas supply.
A natural-gas flare, an increasingly common sight.
Photographer: Andrew Burton/Getty Images North AmericaThere’s one energy market that won’t feast on renewed fear of conflict in the Middle East. The windfall accruing to oil producers after the weekend’s attacks in Saudi Arabia is a bad sign for U.S. natural gas.
Far from scrambling for supplies, production of freedom molecules just hit a new record. Ordinarily, that would be cause for celebration. And it is for customers. Producers, meanwhile, are drowning in the stuff – or, rather, burning it off. Flaring of natural gas, when producers burn the excess that they can’t use or sell, is also hitting records. Preliminary data from Rystad Energy show producers in the Permian shale basin flared more than 800 million cubic feet per day in June. On a trailing 12-month basis, they burned off almost enough to supply the entirety of Texas residential gas demand.