The CEO of top natural gas producer Exxon Mobil says that U.S natural gas prices are too low to allow the energy industry to cover the cost of finding and producing new supplies, according to a report by Reuters.
Consumers benefited from a recent surge in natural gas production that pushed prices below $2 per million British thermal units (mmBtu) in April. Prices have since rebounded, and Exxon Mobile CEO Rex Tillerson told the Council on Foreign Relations, "The cost of supply is not $2.50. We are all losing our shirts today."
Gas prices have risen over 50 percent since April's lows, and were up more than 5 percent on Wednesday to nearly $2.95 per mmBtu, the article states. Still, prices remain well below the $4 to $5 level that makes drilling in pure natural gas fields profitable. Most producers have moved over to more lucrative oil and liquids-based plays to fetch higher prices, which has begun to put a dent in U.S. gas production.
Tillerson also said the recent decline in oil prices appeared to be linked to rising crude oil inventories, economic worries in Europe and a slowdown in China's growth, as well as a more stabile political situation in the Middle East, the article states. "I don't know how far (oil prices) can go. There's room for it to go lower," he told reporters.
U.S. oil prices have dropped about 25 percent since the beginning of May, according to Reuters. To read the article, click here.