Falling Prices Devastate Boomtown

March 14, 2012, Greenwire

As the price of natural gas falls to a 10-year low, energy companies are fleeing gas fields across the country and leaving behind areas that had once boomed from the industry.

In Louisiana’s DeSoto Parish, a traditionally poor area, companies started popping up after the 2008 discovery of the Haynesville Shale. But the drilling rigs in the parish have dwindled from 54 a year ago to just 24 last week. And as the drillers depart, so does the money they spent in the community.

Hotels and recreational vehicle parks built to accommodate energy workers sit empty, restaurants have seen sales collapse and local landowners have seen their royalty checks from drilling companies fall by half. Sales tax revenue for the parish and the school district has begun to fall.

“We are expecting it to continue decreasing,” school superintendent Walter Lee said. “We just don’t know when it’s going to level off.”

A similar trend is playing out in areas from Texas and Arkansas to Pennsylvania and Wyoming, as companies turn from natural gas to oil.

“Natural gas is just killing us right now,” said Bill Mai, co-chairman of Wyoming’s Consensus Revenue Estimating Group. “The bigger problem is we don’t foresee quick turnaround, unless pretty much the whole country goes into an ice age at this point” (Daniel Gilbert, Wall Street Journal [subscription required], March 13). – JE



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