March 22 - Problems in the U.S. economy and a rush to boost output from new wells have caused an imbalance in the supply and demand for the fuel, the head of oil and gas company Devon Energy (DVN.N) said on Monday.
Natural gas prices in the United States have tumbled by about one-third since the start of the year to about $4 per million British thermal units as winter demand has faded and producers continue to pump the fuel into storage.
The typical seasonal demand drop, coupled with slack offtake from utilities seeing weak power usage and manufacturers which have curbed demand, have all weighed on the gas prices, Chairman and Chief Executive told Reuters.
"The economy is not recovering as quickly as we thought it was, and that adversely affects nat gas," he told Reuters.
Nichols, who is also chairman of the oil and gas umbrella group American Petroleum Institute, said the Obama administration had also threatened the economy by implementing tax hikes through its health care policy and other taxes included in its budget proposals.
"They have stretched out this recession and they are going to continue to," he said.
Energy companies have also been producing at high levels because of investors' focus on rewarding companies that are drilling in shale rock for new supplies.
Technology to pull gas from the dense rock formations has improved in recent years, and fields that were once too expensive to tap are now attractive to energy producers.
"Wall Street has focused exclusively on production growth rather than full-cycle returns," Nichols said, referring to the wide gyrations in gas prices that have traditionally influenced output levels.
Data from oil field services company Baker Hughes showed that 939 rigs were drilling new natural gas wells as of March 19, up from 857 a year ago.
But Nichols said that level of activity may not last.
"If these (gas) prices persist, I think there will be a reduction in the rig count," he said.
Shares of Devon fell 0.5 percent to $64.00 on the New York Stock Exchange on Monday, bringing to 13 percent its decline since the end of 2009.
Natural gas prices in the United States have tumbled by about one-third since the start of the year to about $4 per million British thermal units as winter demand has faded and producers continue to pump the fuel into storage.
The typical seasonal demand drop, coupled with slack offtake from utilities seeing weak power usage and manufacturers which have curbed demand, have all weighed on the gas prices, Chairman and Chief Executive told Reuters.
"The economy is not recovering as quickly as we thought it was, and that adversely affects nat gas," he told Reuters.
Nichols, who is also chairman of the oil and gas umbrella group American Petroleum Institute, said the Obama administration had also threatened the economy by implementing tax hikes through its health care policy and other taxes included in its budget proposals.
"They have stretched out this recession and they are going to continue to," he said.
Energy companies have also been producing at high levels because of investors' focus on rewarding companies that are drilling in shale rock for new supplies.
Technology to pull gas from the dense rock formations has improved in recent years, and fields that were once too expensive to tap are now attractive to energy producers.
"Wall Street has focused exclusively on production growth rather than full-cycle returns," Nichols said, referring to the wide gyrations in gas prices that have traditionally influenced output levels.
Data from oil field services company Baker Hughes showed that 939 rigs were drilling new natural gas wells as of March 19, up from 857 a year ago.
But Nichols said that level of activity may not last.
"If these (gas) prices persist, I think there will be a reduction in the rig count," he said.
Shares of Devon fell 0.5 percent to $64.00 on the New York Stock Exchange on Monday, bringing to 13 percent its decline since the end of 2009.
