Since Carl Icahn got decisively involved in Chesapeake Energy Corporation (NYSE:CHK) last week the market has taken to reevaluating the company. Icahn has a solid record of turning businesses around and hope has put upward pressure on the firm’s stock. As of time of writing the company was trading up by almost 5% after solid gains yesterday. It almost looks like the firm could be saved, or at least sold. Meanwhile news arrived yesterday about some of the terrible strategies the company had been employing in a bid to grow.

Leaving aside the huge balance sheet problems Chesapeake is still dealing in a terrible market place. Supply of Natural Gas has increased far beyond demand and the dropping price has forced firms to leave the energy source in the ground. The supply issue has been caused by a huge increase in technology brought about by fracking.

Demand is its own issue and the company has been involved in several strategies to try to increase demand for Natural Gas. These include trying to market the product as an alternative to gasoline, particularly in commercial vehicles.

Last Summer the company invested a great deal of money, $150 million, in Sundrop fuels while Chesapeake was struggling under massive debt. Sundrop seeks to make affordable gasoline from biomass products, like wood chips.

If they are successful, as unlikely as the proposition sounds, they would create a product that directly competes with Chesapeake’s own. A Chesapeake spokesman, Michael Kehs, said ” If nobody has the vision to get this project off the ground it might never happen.” There is no reason, bar moral aspiration, Chesapeake should ever want it to happen.

While Chesapeake is seemingly attempting to reduce demand for its own products the technologies that have caused the crisis in the natural gas market keep getting better.

An article on Albertaoilmagazine.com last week interviewed executives from some of the firms that are researching new and improved ways to frack natural gas. Those technologies will come online in the coming years and will compound the over supply issue.

Icahn may be able to work on the balance sheet problems but it is supply and demand that are really killing Chesapeake. If the company continues to harm its own supply by making suicidal investments there’s no way they’ll survive.

Chesapeake is still in trouble. There is value to be added in reducing debt and improving governance but the natural gas market is not as easily lassoed.