What will be the effect of low imported oil prices be on domestic natural gas?

[roomtempmayo]

If OPEC members succeed in lowering oil prices enough to crater the American oil industry, what will happen to natural gas prices in the US?

I don't know much about the oil industry, but my impression is that natural gas is currently very cheap in the US because it's a byproduct of domestic fracking.

If fracking grinds to a halt, will the price of natural gas shoot up?

This seems like an increasingly important question as we've transitioned a bunch of our electrical grid to natural gas over the past decade while natural gas has been cheap.

[Financial.Velociraptor]

You probably have it right.  Below 40 a bbl, most domestic frackers are below break even and will not drill new oil wells.  Supply of nat gas should fall, driving up the price. This will take a month or so to shake out as the major producers hedge their production and will continue to drill some wells because they have locked in last month's pricing.

[roomtempmayo]

@Financial.Velociraptor If we see a major spike in natural gas prices, that's going to be tough next winter on northern areas of the country that depend on it for heat, and increasingly for electricity.  Cheap gas might not mean cheap energy all around.

[Financial.Velociraptor]

@Financial.Velociraptor If we see a major spike in natural gas prices, that's going to be tough next winter on northern areas of the country that depend on it for heat, and increasingly for electricity.  Cheap gas might not mean cheap energy all around.

@caleb I don't expect a "major" spike back to the glory days of 7 dollar gas.  Around the current price is the break even for the best Marcellus and Utica shale gas drillers.  Around 2.50 to 3.00 they get mighty motivated to go all in.  Knock me down with a feather if it goes over 3.25 for domestic gas.