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Sunday January 29, 2012 | 12:00 AM

Get ready for the roller coaster ride. Chesapeake Energy’s announcement that it would reduce natural gas drilling in Northeastern Pennsylvania by 30 percent is the first of what likely will be many zigs and zags for the local economy, as energy producers gear up or down depending on prices.

Chesapeake acknowledged that it was looking out for “shareholder value” in cutting production, particularly in “dry gas” fields like those in counties to our north. That’s poorly disguised code for not being able to make money on gas while the price is low – about half what it was a year ago. That’s great for consumers, but not for producers and those holding their stock.

How did this happen? “The law of supply and demand,” said Steve Forde, a spokesman for the industry trade group Marcellus Shale Coalition. But not entirely, he hinted.

“The ongoing uncertainty” surrounding local authority over zoning and the unsettled question of what, if any, tax or fee the drillers will pay, “has weighed on many of the companies’ decision making.”

Funny, Chesapeake didn’t mention either of those factors. It simply said some drilling had become unprofitable. That’s understandable given the headlong rush to lease land and punch holes in the ground the last few years, with accompanying promises of ever-expanding employment and lifting of the jackboot of dependence on foreign oil from America’s neck.

The company’s two-pronged reaction to a glut – cutting back here while shifting resources to “wet gas” regions where they extract other saleable products like ethane along with natural gas – has a double benefit, for them.

First, the price of natural gas immediately rose on the prospect of lower supply. And that made their stock prices jump, as investors foresaw them turning on the tap when prices rebounded sufficiently.

For Pennsylvanians, there’s no such opportunity. Gov. Tom Corbett’s stubborn insistence that the industry get a free pass from paying a tax on the gas it removes means an absence of funds to fight the deleterious effects of drilling and its associated activities, or to help communities ride out the inevitable economic ups and downs in an energy producing area.

That’s not the companies’ fault, it’s a failure of government. The pullback by Chesapeake and other drillers shows that market forces, not a justifiable tax, will determine how much of an economic force natural gas production will be here.

Fortunately, while Northeastern Pennsylvania is a dry gas zone, it’s also close to major metropolitan East Coast markets. The reduced transportation cost compared to Southwest fields means our gas is worth drilling at a lower price. That’s apparently why Chesapeake cut back drilling here by half as much as in Texas and Arkansas.

Forde said it’s important to note that “now there’s this underlying infrastructure” of transportation networks, pipelines and other support for the drilling industry in Northeastern Pennsylvania. That, he said, will insure the industry will remain productive for years to come.

He may be right, but we shouldn’t forget that under the present conditions, the drillers will call the tune and the rest of us will have to figure out how to march to it.


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