Governors focus on rising heating prices

Posted: Wednesday, September 20, 2000

COLUMBUS, Ohio - Fears of high heating bills this winter should not be used to restrict the country's embrace of natural gas as a new energy source, officials at a national meeting on natural gas prices co-chaired by Alaska Gov. Tony Knowles said today.

"The country is making a huge bet, a good bet, but a huge bet on natural gas that basically we're not going to have a new economy unless we have natural gas to support the electric power generation," said Daniel Yergin, chairman of the Cambridge Energy Research Associates, a research and consulting firm.

Gov. Bob Taft and Knowles hosted the conference aimed at emphasizing facts about natural gas in light of heating bills expected to be $20 to $30 higher a month this winter.

The main message: an increased demand for natural gas has temporarily pushed prices higher. When producers catch up by drilling for new reserves, prices will stabilize, participants said.

"Prices will come down," said Robert Skaggs, president of Columbia Gas of Ohio. "Maybe not in time for this winter, but for future winters. Our collective challenge is to resist tinkering with the market. The role of this utility and others within the energy industry is to help our customers through these periods of higher prices."

The wholesale price of natural gas is about $5 per thousand cubic feet; normally, the price this time of year is about $2 per thousand cubic feet. The average price for 1995-1999 was $2.01, according to the Interstate Oil and Gas Compact Commission, a group of oil and gas producing states that organized the conference.

A typical home needs between 80,000 and 90,000 cubic feet of gas a year at a current cost of about $380 a year.

"The worst thing that could happen now is some kind of price control that frustrates and prevents the kind of exploration and expanded supply of our American supplies that will solve this problem in the long-run," Taft said.

As utilities turn to clean-burning natural gas to meet growing demands for electricity, demand for the fuel has boomed. Demand hit 22 trillion cubic feet last year and could go to 30 trillion cubic feet this year, Knowles said.

"The question is, 'Can we supply enough natural gas to affordably heat our homes, cook our meals, turn on our lights and provide industry and commerce the fuel it needs to continue to manufacture and to build our prosperity and to provide the energy to spark our new economy," he said.

Interest has grown recently in tapping the natural gas reserves in Alaska's North Slope, most of which now is reinjected to spur oil production.

Knowles said the price increases this year are providing the incentive to finally push through a decades old plan to pipe natural gas from Alaska to the rest of the country.

Alaska has more than 30 trillion cubic feet of natural gas available, but no way to transport it.

"A lot of people asked me, 'Are there environmental concerns, are there other issues of development?' There aren't. Frankly, it's just a matter of price the market has not provided enough returns to justify the multibillion cost of the pipeline," Knowles said.

The Alaska Wilderness League wants any natural gas pipeline to follow an existing route. The conservation group opposes any pipeline that would pass through environmentally sensitive areas.

"We certainly have environmental concerns," Adam Kolton, director of the Washington-based group, said Tuesday.

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