Although the electricity crisis in late 2000 and early 2001 received the most media attention in California, problems with natural gas were just as pronounced. In summer 2000, electricity imports from the Pacific Northwest were constrained. “For the first time in a decade, California's older, inefficient gas-fired generating plants were called upon to operate on a continuous basis. The legal, institutional, physical and fiscal infrastructures all reached their limits simultaneously” (Choe 2001). Throughout the fall, higher-than-average use of gas for electricity generation caused by a number of factors limited the injection of gas into storage in preparation for the winter peak gas demand period.
The result was price volatility and shortfalls in natural gas availability. On a monthly average basis, gas prices rose by a factor of five at the southern California border. The resulting spike in daily gas prices was even greater. Figure 4.1 illustrates the spike in natural gas prices that occurred at the California border in 2000 and 2001.
Figure 4.1—Southern California Border Natural Gas Prices
SOURCE: Enerfax, http://www.enerfax.com (2002).