This is actually at the core of Marcellus Shale economics. A lot of early visions of what profit (and for individuals the potential royalties) the Marcellus Shale could bring presumed far more than they should have that new Pennsylvania supplies would continue to sell at a higher price than other supplies out west. The price differential caused in large part by the proximity to New England demand or the city-gate price for the New York region.
well....... That economics 101 hits you and that question on what happens when you push the supply curve out. But we are not talking widgets here.
So don't ask me why the Department of Energy is able to put out new data when most other Fed agencies can't, but today
they have one of those Rosetta Stone graphics and analysis if you want to read more
Channeling my inner energy trader, this is saying that where there used to be a premium for Pennsylvania produced natural gas... now the futures market is projecting that Pennsylvania supplies will be worth less than the spot price at the reference Henry Hub... which is in Louisiana. Rational expectations anyone?
So this is all really important to the future of shale development in Pennsylvania. When you factor in that the Henry Hub prices are sustaining very low $$ already, the lower price available to Pennsylvania suppliers is really depressing realized prices.