ds Internet Usage Fuels Rise In Natural Gas Prices Source: Denver Rocky Mountain News Publication date: 2000-08-11

Demand for electricity - driven in part by burgeoning use of the Internet - will continue to bolster demand for natural gas and keep prices high, according to experts gathered for the Rocky Mountain Natural Gas Strategy Conference. After suffering through a two-year depression, natural gas prices skyrocketed this spring, topping $4 per MMbtu (million British thermal units), up from $2.20 MMbtu the year before.

The reason: During the two-year price trough, gas producers cut back production. At the same time, electric companies began buying large quantities of natural gas to fuel their new, super efficient gas-fired power plants.

Now natural gas producers have more demand for fuel than they can meet.

"We've never seen a market like this before," said Keith Rattie, senior vice president of natural gas at Coastal Corp. "And we've never seen prices like this."

Rattie and others attribute most of the current natural gas crunch to rising electric demand. And they link much of the new demand for electricity to the economy and rising use of the Internet and all the switches, routers and servers that keep it running.

Rattie and others estimate that as much as 10 percent of current electricity consumption is due to Internet use, up from about 2 percent 10 years ago.

"The e-commerce revolution is sucking up a lot of electricity," Rattie said.

Tom Robinson, managing director of research at Boston-based Cambridge Energy Research Associates, said the situation isn't likely to change much during the next two years.

Though natural gas prices remain volatile, Robinson expects them to average about $3.50 per MMbtu, with dramatic spikes possible if the United States experiences a cold winter this year

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-- Martin Thompson (mthom1927@aol.com), August 12, 2000