For all the right reasons, American consumers and power companies
in recent years made natural gas their fuel of choice. It's clean-
burning, it's efficient, and suppliers say there is plenty in the
But at a time when 70 percent of new homes are turning to natural
gas for heat, and electricity suppliers across the country want to
build hundreds of new gas-fired power plants, it doesn't take a
fossil-fuel expert to see that demand is outpacing supply.
All it takes is the courage to open the monthly heating bill.
A severe natural-gas shortage has been ducked this winter, yet
prices remain more than double levels of a year ago.
Looking ahead further, the question energy experts are asking is
whether new supplies can be brought to market in time to meet
growing demand from places like California - which is counting on
gas-fired plants to end its power crisis.
"Shortages occur when you can't get it out of the ground fast
enough to satisfy demand," says Jim Jensen, a veteran energy
consultant in Wellesley, Mass. "We have fallen a bit behind. We are
likely for a period to have a tight market."
For the industry, higher gas prices are a crucial support for the
necessary billions in investments. Already, there's a surge in
drilling and renewed talk of a pipeline to bring gas from Alaska
and Canada's Mackenzie Delta.
But the high prices are rattling Washington.
Federal Reserve Chairman Alan Greenspan spoke of the damage to
the economy from high gas prices last Wednesday. The White House,
meanwhile, has set up a task force on energy under Vice President
In Congress, various energy hearings are under way, and Sen.
Frank Murkowski (R) of Alaska last week introduced a bill that
promotes US gas production.
While supplies remain tight, gas prices have dropped from about
$10 per thousand cubic feet (Mcf) in December to about $5 now. But
even as winter draws to an end, experts don't foresee prices
retreating any time soon to the roughly $2 level of a year ago.
Perhaps it will head to around $4 plus, says Paul Ziff, head of
Ziff Energy Group in Houston and Calgary, Alberta.
That sounds like cold comfort for the nearly 175 million
Americans relying on natural gas for space heating, water heating,
cooking, and clothes drying.
But that price level could be just what the industry needs to
encourage development of new supplies.
Optimists in the gas industry figure the supply will grow with
high prices. Pessimists suspect growth will not be fast enough to
meet demand - which the American Gas Association says could rise 67
percent by 2020. …