Natural Gas Prices Heat Up Source: The Salt Lake Tribune Publication date: 2000-09-28

It would be easy, too easy, for many to make false assumptions when natural gas prices rise during the coming winter months. However, the real culprit will be several economic factors that have come together to boost prices for this fuel, popular for home heating among most Utahns. The U.S. Energy Department estimates that natural gas prices this winter could rise to $8.59 per thousand cubic feet, a 25 percent jump over last winter's prices. Questar Gas Co., which supplies natural gas to most of Utah's homes, estimates the average Utah homeowner will see an increase ranging from $2.50 to $8 a month this winter. While less severe than the national gas price forecasts, it is a noticeable increase.

Price rises are not due to any cartel's plot to limit production or an attempt by the gas industry to piggyback onto rising oil prices. Rather, they are due to old-fashioned economic factors.

According to figures the American Gas Association compiled and released last June, demand for natural gas in all sectors has risen an average of 2.8 percent a year during the past decade. This is largely due to the same sustained economic boom that the Clinton administration has been eager to take credit for. Some 40 percent of natural gas consumed in the United States is used by factories and other industrial customers, including power plants.

Aside from the robust economy's demand for more gas, some industrial users have been loath to quit natural gas for traditional fuel oil as oil prices are now high.

In addition, lower wellhead prices in 1998 and into 1999 led to a reduced number of rigs drilling for natural gas. Drilling is now up, but there is a lag time before increased production affects prices. Also, the United States is increasingly relying on Canadian imports, which currently account for about 13 percent of consumption.

To weather the price rises with a minimum of hardship, consumers should conserve, update furnaces and other appliances with energy- efficient models, and look into those fixed-rate contracts that Questar and other utilities offer customers to avoid surprises. This is about all that practically can be done.

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-- Martin Thompson (mthom1927@aol.com), September 28, 2000