- The Washington Times - Wednesday, September 26, 2001


U.S. consumers will pay less for natural gas to heat their homes this winter as supplies soar in the face of a worldwide economic downturn that has curbed fuel use by industrial plants, the Natural Gas Supply Association said yesterday.

The sag in demand and rise in supplies is certain to cut heating bills for consumers who use natural gas, the industry group said in its annual winter forecast.

"We are not worried about prices this winter. We think consumers will love prices," said R. Skip Horvath, president of the gas-industry group.

Mr. Horvath declined to estimate consumer prices this winter. The federal government recently said natural-gas prices paid by consumers were likely to average about $7.07 per thousand cubic feet (mcf) during January, February and March, down from $9.89 one year ago.

U.S. natural-gas demand for the 2001-2002 heating season is estimated to fall 250 billion cubic feet (bcf), or 2.1 percent, from last year, the gas group said. Demand this winter will total an estimated 11.445 trillion cubic feet.

Before the deadly Sept. 11 attacks in Washington and New York, the group said it was projecting overall natural-gas demand to increase 1.5 percent, or 175 bcf. But the attacks, which left more than 6,000 people missing or dead, have had a chilling effect on consumer confidence, Wall Street and the U.S. economy.

The biggest drop in natural-gas consumption this winter is expected to come from U.S. industrial companies, the hardest-hit by the economic slowdown.

The gas group initially estimated gas demand by manufacturing plants, automakers, mines and other industries would increase by 5.8 percent this winter. Now, demand in the industrial sector is expected to fall 4.8 percent.

"The events of September 11 will have the greatest impact on natural-gas demand in the industrial sector," the report said.

American consumers' lack of interest in buying new cars could in turn slow demand for steel production, which accounts for 10 percent of industrial natural-gas demand, the group said.

Mr. Horvath said that industrial demand for gas could fall even more.

"A large single- or double-digit drop is possible," he said. "I'm not going to say it's going to get worse. It could."

Prices have skidded sharply in recent days.

Natural-gas futures fell to a 30-month low on the New York Mercantile Exchange on Monday. The October contract closed at $1.91 per million British thermal units (mmBtu), after trading as low as $1.88 per mmBtu.

The October natural-gas contract has plunged by 25 percent over the past six trading sessions.

This winter is expected to be far different from one year ago, when natural-gas supplies were tight, temperatures fell to 100-year lows and wellhead prices soared to record highs above $10 per mmbtu.

The U.S. inventory of natural gas at the beginning of this winter heating season is an estimated 500 bcf higher than one year ago, the group said. That will help "ensure downward pressure on natural-gas prices, compared to last year," it added.

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