PITTSBURGH ─ To Russell Gold, Appalachia is witnessing a historic shift in energy markets. Speaking at Hart Energy’s recent Marcellus-Utica Midstream 2015 conference, the Wall Street Journal senior energy reporter compared the recent decline of oil prices to another oil price shock to argue that the oil markets are now irrevocably changed.

“Every day energy markets are filled with lots of chaos, lots of crises,” he said. “You know, just another day on the NYMEX. But when you try to rise above the daily fluctuations, energy markets tend to be fairly placid over long periods of time. But every once in a while they do go into a major upheaval, and I think we’re very clearly in one of those upheavals right now.”

Referring to oil’s recent price drop from $107 per barrel to $44 per barrel, Gold compared it to other oil price shocks that resulted from the commodity’s use as a political weapon in the 1970s. During that era several Arab nations instituted an oil embargo against the U.S. in response to American support of Israel in the 1973 Arab-Israeli War, and the Iranian revolution led to 4 million barrels per day coming out of production. While the initial shocks from these political events may have increased the price of oil, they left consumer nations with a valuable lesson.

“The lesson they took was, ‘We don’t want to depend so much on oil,’” Gold said. “And nuclear power happens. Between 1980 and 1987, 50% of the nuclear power plants ever built went into operation.”

Global oil prices went into free-fall as a result of this decrease in demand, and they remained relatively low for 15 years. Gold argued that it was a technological breakthrough, nuclear power, and government policy that came together to fundamentally change the market. He sees these same ingredients again today.

“So we’re in a similar period of upheaval again, but this time it’s not a technology that’s changed demand as nuclear power did. It’s a technology, hydraulic fracturing, fracking, that’s changed the amount of supply we have.”

Appalachians should find this story for oil familiar; after all, Gold said, they saw it with the use of fracking for natural gas production during the past several years. Even while Marcellus gas output has soared from less than 2 billion cubic feet per day (Bcf/d) in 2009 to more than 16 Bcf/d at the beginning of this year, prices have been relatively constant around a low $4 per million Btu.

Fracking has fundamentally changed the weltanschauung of the oil and gas industry.

“What fracking did was that it unlocked a massively scalable resource at remarkably low prices. It completely shifted the focus of the industry; it had been going to higher and higher prices, scrambling to more and more inaccessible reserves, and now all of a sudden these reserves were near at hand, close by, close to market, but more importantly, massively scalable.”

The market has two possible responses to such a shift. One, which Gold finds less likely, is a view from OPEC’s secretary general, Abdalla Salem El-Badri. He thinks that companies will slash capex budgets, investment will decline, and supply will decrease until the market corrects itself. Such a view may entail another rapid price spike, according to Gold.

However, the second path forward incorporates the new paradigm of scalable shale and a new pricing dynamic. After prices rise from a decline in production, and supply and demand find each other once again, shale producers will have a historically unique opportunity.

“They’ll go out and they’ll be able to turn on their production system, drill more wells, because they know where the oil is. They know where the gas is; that’s not a question anymore. And so I suspect that something has fundamentally changed in this market, and we are at a new period where we’re not going to return to $200 oil. We’re never going to go back to $100 oil, or at least not any time soon because much like what happened in the gas market, where the price came down and found this equilibrium between $3 and $5, I think the same thing is going to happen with oil. We’re going to find a new equilibrium.”

Gold thinks this would be good for midstream producers.

“The one thing that’s bad for our commodity market is giant swings in prices, these wild gyrations from $20 oil, $30 oil to $200 oil. We’ve entered an era of price stability where the prices will knock around at about $60 or so, and if it stays that way, that’s a very good place to be. You can budget around that. You can figure out which wells work, what to invest in.”

Markets, take note. It’s a new equilibrium.