"The spike this winter is because the demand has increased and production decreased. That simple Economics 101." Roger Cooper of the American Gas Association

CBS News Correspondent Wyatt Andrews reports why some gas users could become overheated over prices.

Burned By Natural Gas Prices

Price Increase Of 25 To 50 Percent This Winter Mild Winters Caused Drop-Off In Demand, Drilling Along With A Cold Winter, Shortages Are Expected

WASHINGTON, D.C., Oct. 22, 2000 (CBS) Natural gas customers who thought prices would always stay cheap are in for a great shock when they receive their gas bill, reports CBS News Correspondent Wyatt Andrews.

That shock, depending on where you live, will be a natural gas price hike of 25 to 50 percent, with the increase coming in the dead of winter. Forget the controversy over oil. Gas heat customers in America outnumber oil customers five to one. And now, gas consumers will pay more than a hundred dollars extra over the winter.

Major industrial users like Fairfax Hospital in Fairfax, Virginia could spend a thousand dollars extra per day.

"You just have to resign yourself to the fact. We're a 24-7 operation and we don't have the luxury of shutting down," said David Marra, a hospital official.

So why will consumers pay so much more for a fuel which America owns in vast quantities, the price of which is not subject to the whims of overseas suppliers?

There is one reason: not enough of it is coming out of the ground.

Two straight mild winters depressed the price of gas so much, experts say, gas drillers stopped drilling. Now that a normal, colder winter is expected, too many buyers are chasing the depleted supply.

"The spike this winter is because the demand has increased and production decreased. That simple Economics 101," said Roger Cooper of the American Gas Association.

Which will impact Politics 101 in this election year. The spike in gas prices gives an opening to the Republican argument that the one sure way to pay less for energy is to drill for more. The gas industry is lobbying hard to do just that.

"We have 40 trillion cubic feet of natural gas up in Alaska thats being reinjected into the Prudhoe Bay field. We need to build another or a new natural gas pipeline to bring that natural gas down to the United States," says Rep. Joe Barton, R-Texas.

"We need to increase the amount of gas that's produced," said Cooper. "And to do that were going to have to go and drill in areas where we haven't been drilling. If we do that, the price of gas will be lower to consumers."

And with gas, unlike oil, there's no Strategic Petroleum Reserve to tap, no OPEC to blame. There's only a big new bill, thanks to an overheated market.

http://cbsnews.cbs.com/now/story/0,1597,243217-412,00.shtml

-- Martin Thompson (mthom1927@aol.com), October 23, 2000