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Forget Oil - Natural Gas is Skyrocketing
USA TODAY, September 29, 2000

The American Gas Association, which represents gas utilities, has warned that gas prices to consumers could be 15% to 40% higher this winter than last. And while the AGA says there will be plenty of gas, other analysts say stockpiles are sharply lower than their five-year average, a worrisome development if this winter is more severe than forecast. Add to that the fact that 54% of U.S. households heat with natural gas, vs. only about 9% that heat with heating oil, and it would seem odd that politicians have lavished far more attention on heating oil. In an attempt to drive down heating oil prices and build supplies, the White House said last week it will release 30 million barrels of crude from the nation's Strategic Petroleum Reserve. That helped push down the price of crude from about $37 a barrel last week to $31.46 Wednesday.

Experts expect no similar move to lower natural gas prices. ''We're not talking about gas because, frankly, politics is the art of the possible, and there's no point in pointing out a problem that's impossible to solve,'' says Bill O'Grady, an energy analyst at A.G. Edwards in St. Louis. Unlike oil, there's no easy way to get extra supplies of natural gas. While it's estimated that Saudi Arabia could produce another 2 million barrels of oil a day, and the U.S. can tap its 571 million-barrel oil reserve, there's virtually nothing similar for natural gas. Most gas supplies come from existing production in the USA and Canada, and with prices at extraordinary levels, producers are running just about flat-out. While it's possible to import liquefied natural gas, experts say it can't come in quantities big enough to make any difference here this winter. That leaves little wiggle room. Jim Osten, chief energy economist for Standard & Poor's DRI, says a tough winter could drive prices even higher as utilities go to the higher-priced spot market for extra supplies. ''People are going to yell and scream that their gas prices are too high,'' says Michael Paslawskyj, vice president of economic research at CIT. ''If we have a cold winter, we're going to have a real problem.''

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