What’s Up With Natural Gas Prices? Many of our customers The wholesale price of years” it becomes increasingly are wondering what has natural gas (around $6 difficult for the companies that get been happening with per thousand cubic feet) natural gas out of the ground to natural gas prices lately — is twice as high as it deliver our customers the energy it has been a hot topic in was this time last year they need and want. Companies the news and you may (around $3). that produce natural gas need more have heard warnings access to fresh natural gas supplies. about higher prices in Natural gas meets one- the next few months. fourth of the United ECONOMIC IMPACT We think prices will States’ energy needs, and be higher this winter — is our country’s fastest- Q: What is the impact of these depending on the growing major energy price swings on the U.S. economy? weather and other source. In addition to factors — and we are home-heating, natural A: Federal Reserve Board doing everything we can gas is a backbone of Chairman Alan Greenspan made to line up energy supplies. American manufacturing a strong statement in Congress Below are some of the questions — used to make a wide range of on May 21, calling the natural gas we are hearing most often: things, such as fertilizer, aspirin, supply crunch “a very serious automobiles, steel, plastics, processed problem.” It’s tough to rebuild the Q: Last summer, wholesale food and even electric power. U.S. economy when some natural gas prices were at $3.00 Thus, natural gas helps to fuel manufacturers are paying nearly per thousand cubic feet. In June economic growth. three times as much for natural gas 2003 they were twice that. as they did just a few years What’s happening? There are ample ago. A number of quantities of manufacturers A: Natural gas is increasingly untouched natural have slowed 24% production, laid popular for use in homes, businesses, gas resources in natural gas off workers factories and electric power the United States 39% oil and even gone generation because it is efficient, and Canada. clean, and reliable. However, natural However, as out of business 23% gas production has not kept pace actively-drilled because of coal with rising demand, and the market natural gas wells natural gas price of natural gas reflects this. reach their “golden 8% prices. nuclear 0.4% solar, wind 3% and other hydroelectric 3.3% renewables wood waste and alcohol It’s a pocketbook issue for millions economic activity have an of families, too.When some families almost immediate impact on the paid $100 more to heat their homes wholesale price of natural gas. last winter, it meant they had $100 More supply = lower prices. less to spend on other things. SHORT-TERM OPTIONS ARE THERE SHORTAGES? Q: What can be done to Q: Some news reports say there is a alleviate the price crunch natural gas “shortage.” Is this true? this year? A: No.This is a poor use of words. A: Unfortunately, options are pretty The word “shortage” makes you limited for the next few years. think you’re running out of Efforts that can be taken in the something, when in fact North short-term include: America holds abundant supplies of natural gas.What we are Increase supply — Even with experiencing now is a period of dramatic production efforts, it 2001 22 trillion cubic feet tight supplies. Homes and businesses typically takes 6-18 months before (total U.S. natural gas consumption) will continue to receive the natural there is a sustained supply response 2020 33 trillion cubic feet gas they want and expect — but to higher prices. A fraction of the (projected U.S. natural gas consumption) it may cost them more than it did natural gas we use is imported from last year. other countries in a condensed liquid state; efforts can be made to AS U.S. NATURAL GAS increase these liquefied natural gas DEMAND GROWS, THE MAIN SOLUTION (LNG) imports. Q: How do you bring natural gas SOURCES OF SUPPLY prices down? Decrease demand — Another MUST EXPAND way to alleviate the supply crunch is Source: Meeting the Gas Supply Challenge for the Next 20 A: There is a short answer: for factories and other customers Years — Lower-48 and Canada, and Non-Traditional Sources, studies conducted for the U.S. Department of Energy by the INCREASE SUPPLY. It’s in that use large amounts of natural gas American Gas Foundation (2002) consumers’ best interest to do so. to slow down production lines or move their operations overseas. During the 1990s, consumers However, this obviously has a harsh enjoyed natural gas at affordable impact on American workers, local can help, too. For example, during prices because economies and hot weather, consumers can cut available supplies corporate back their use of electricity in order of natural gas earnings. to ease the amount of natural gas were greater needed to generate electricity. than demand. Energy Before the winter, consumers can Supply and conservation — improve their home insulation. demand are now Encouraging While efficiency alone can help it in a very tight natural gas isn’t a long-term solution — only balance, and customers to increased supplies will make a changes in the 99% of the natural gas used in this country comes use energy major difference as demand for from North America, which gives American consumers weather or the energy control and self-sufficiency they want. more efficiently natural gas continues to grow.
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