(12/8/00 4:33:34 PM PT)

LAS VEGAS -- The United States faces a one-in-five chance of running out of natural gas this winter, energy market consultant PIRA Energy Group said Friday.

The chances that the country will run out of gas in the West are as high as one in two, Allan Stewart, managing director of PIRA, said at an industry conference.

'I've never seen a more dysfunctional market,' Stewart said. 'Whether that means natural gas prices would hit $100 per million British thermal units or $1,000/MMBtu, I don't know. This is our forecast of the chances of running out of gas.'

According to the American Gas Association, the Western United States had 323 billion cubic feet of natural gas in storage on Dec. 1, compared with about 450 billion cubic feet at this time in each of the past two years.

But PIRA says the first figure is inflated, and estimates the West actually has less than 300 billion cubic feet in storage now.

Very tight natural gas and power markets will continue in the West through the coming summer and winter 2001-02 unless there is a significant reduction in demand or a major amount of rain and snowfall in the next few months.

But, based on snowfall in the Northwest so far this year, PIRA is forecasting that 2001 hydroelectric supplies will be lower than they were in 2000.

The entire U.S. energy supply problem could be solved by a hard landing for the economy, which PIRA economists say has a one in two chance of occurring.

Higher prices could also help reduce demand.

'Consumers need to see some economic chin music,' Mr. Stewart said. 'We have to destroy demand.'

Speaking about California's power crisis, Mr. Stewart said he hoped Gov. Gray Davis and regulators will raise energy prices quickly to cut back demand.

'I'm frightened,' Mr. Stewart said, predicting that the odds are good the crisis in California will end Davis' career. 'This is a serious time, and serious people are needed. But we don't have very visionary leaders willing to make tough decisions.'

PIRA is predicting that electricity price spikes in the summer and winter in the Midwest have been softened by the significant addition of generators. But PIRA says power prices in the spring and fall 'shoulder months' will rise due to outages for plant maintenance and the installation of pollution control equipment.

Copyright (c) 2000 Dow Jones & Company, Inc.

http://dowjones.work.com/index.asp?layout=story_ind_news&vertical=Energy&industry=Oil+%26+Gas&doc_id=22735

-- Cave Man (caves@are.us), December 11, 2000

Answers

Gas prices set fire to wood sales

Supply may not meet demand, firewood dealers warn

David Reevely The Ottawa Citizen

With natural gas prices on the rise, firewood in the region could be a scarce commodity in the new year, firewood dealers say.

"I haven't seen demand like this since the ice storm," said John Provost, who runs Duquette's Firewood in Orleans.

Natural gas prices are set to climb to about $1,500 for a typical gas-heated home, up from about $980 last year.

The Ontario Energy Board, which regulates what gas companies can charge for their products, is allowing them to increase rates to account for record-high prices on the international market.

Analysts said prices might not rise much as long as the winter isn't too cold. Then came last week's cold snap, with temperatures 10 to 12 degrees below normal.

Suddenly, fireplaces and wood stoves are being used for more than decoration.

"Most dealers are pretty much sold out," said Alfred Roger, who sells firewood in south Gloucester.

"But there's not much money in firewood," he adds. "The profit is only about five to seven per cent."

Mr. Provost has raised his prices from about $70 for a face cord to about $80. Even so, he says he's making less money than last year.

"Demand's up, but you know, the costs are up, too. Fuel costs more and so people want wood, but it costs more for everyone."

Mr. Provost's business is dependent on gasoline prices. When natural gas prices increase demand for his product, gasoline prices increase his costs of doing business.

"For us, everything from the bush on up is more expensive," he said.

http://www.ottawacitizen.com/city/001211/5025516.html

-- Cave Man (caves@are.us), December 11, 2000.

http://biz.yahoo.com/rf/001210/n1060157.html

Sunday December 10, 2:25 pm Eastern Time

U.S. West energy crisis seen threat to industry

By Leonard Anderson

SAN FRANCISCO, Dec 12 (Reuters) - A widening energy crisis in the western United States is disrupting industries from computer makers in California's Silicon Valley to pulp and paper producers and aluminum smelters in the Pacific Northwest.

``An energy crisis of electricity shortages and high power and natural gas prices now is becoming an economic emergency,'' Tapan Munroe, a California economist and head of an energy and economic research firm in Moraga, Calif., told Reuters.

The region is confronting the fact that almost no new power plants have been built for 10 years to meet the rising needs of its rapidly growing population and strong economy.

Adding to the problem is a natural gas supply crunch caused by two years of low demand, low prices, and idled drilling rigs.

Gas flowing into Southern California soared last week to $35 per million British thermal units, 16 times its price a year ago and no price relief is likely until the spring.

Tom Lieser, who compiles a widely watched survey of California's economy for the Anderson School at the University of California at Los Angeles, said chronic energy shortages would keep California consumer prices above the national average.

``(Energy) might be...a factor for businesses considering whether to relocate to California,'' he said.

The Golden State was battered last week by power emergencies that cut electricity to several large industrial companies who pay discounted rates for being turned off when supplies run low.

California faces a second week of power cuts, and Oregon and Washington are gearing for trouble as a frigid Alaskan cold front bears down on the region, prompting the governors of Oregon and Washington to jointly urge residents to conserve electricity and natural gas for the next week.

HIGH TECH POWER APPETITE

California's computer industry and its growing appetite for electricity is a big reason for tighter supplies.

While power demand is rising at about 2 percent a year in California, it is surging at 5 percent in Silicon Valley.

``Power blackouts could cost Silicon Valley-based companies an estimated $100 million a day,'' said Michelle Montague-Bruno, a spokeswoman for the Silicon Valley Manufacturing Group, a trade organization representing 190 technology firms.

The bill for lost production in Silicon Valley blackouts during a heat wave last June cost some companies as much as $1 million a minute, she said.

Intel Corp. (NasdaqNM:INTC - news), the world's No. 1 semiconductor maker, said its chip making operation in Santa Clara would be seriously damaged by a major failure of the power grid, but has spread its risk by building new plants in other states and overseas.

In the Pacific Northwest, sharply higher power prices have already hurt aluminum producers, many of whom moved to the region decades ago due to its abundant supply of cheap hydropower.

Mike Zenker, an analyst at Cambridge Energy Research Associates in Oakland, Calif., said aluminum cutbacks could be especially harmful because U.S. production, which accounts for 16 percent of worldwide output, is concentrated in the Northwest.

Last week, Columbia Falls Aluminum announced a second cutback this year in output from its smelter in Montana, while last month Kaiser Aluminum (NYSE:KLU - news) said it was cutting production at its Mead smelter in Washington state which was already operating well below capacity.

On Friday, Montreal-based Alcan Aluminium Ltd. (Toronto:AL.TO - news) said it will cut output by 50,000 metric tons a year at its Kitimat, British Columbia, smelter to save water needed to generate power.

Northwest forest products companies also are hurting. Georgia-Pacific Corp. (NYSE:GP - news) is closing down a paper mill in Bellingham, Wash., and laying off nearly 800 workers until the power shortage eases.

With monthly power costs soaring past $10 million from an average of about $1.2 million, the mill can no longer turn a profit, company spokesman Greg Guest said.

While the power shortage has not slowed work at Seattle-based Boeing Co. (NYSE:BA - news), the giant commercial jet maker said it was shutting off lights and other machinery to save electricity.

-- (in@energy.news), December 11, 2000.

PSC: Energy rates to go even higher

By ROBERT W. BLACK

Associated Press Writer

CHEYENNE, Wyo. (AP) -- With a bitterly cold storm bearing down and no end in sight to a nationwide shortage of natural gas, Wyoming residents were warned to brace for even higher energy bills.

"We are trying ... to stress the seriousness of the situation but we are certainly not trying to invoke or evoke a panic," Wyoming Public Service Commission Chairman Steve Ellenbecker said during a news conference Thursday.

The combination of cold weather and rapidly increasing demand for electricity is driving wholesale prices to record highs, he said.

"We anticipate that the upward pressure on natural gas prices will continue," Ellenbecker said.

He and Commissioner Steve Furtney said they could not predict when the high prices might subside.

"It's pretty likely people are going to be seeing a doubling of their utility bills compared to a year ago and it could go beyond that," Furtney said.

The commissioners said the problem has been aggravated by nationwide population growth; increased use of personal computers; demand for cleaner-burning natural gas-fired electric plants; warmer-than-normal summers that boosted air conditioning use and prevented utilities from storing more gas; and uncertainty over the direction of electricity regulation, which has slowed building of new power plants.

Exacerbating the problem is California's troubled transition to a deregulated electric industry, Ellenbecker said.

PacifiCorp, supplier of 70 percent of Wyoming's electric power, is based in the Pacific Northwest, which is normally supplied in the winter by California plants.

But California, facing shortages of its own, is siphoning much of the available power because many of that state's transmission plants are out of service due to emission and price restrictions or repairs, Ellenbecker said.

"Governor Davis of California must take immediate action to temporarily lift both emission and price restrictions in California to help insure that California regulatory constraints do not otherwise throw the Western electric grid into a catastrophic blackout," he said.

California Gov. Gray Davis said Thursday he has little control because there are too many players in that state's electric industry.

No blackouts are forecast for Wyoming, Furtney said, but if California continues to buy up power, it could affect the ability of PacifiCorp to purchase and supply power, he said.

The commissioners and energy company representatives urged consumers to turn off lights and computers and lower thermostats.

"Every conservation effort that is possible should be taken," said Rick Kaysen, president of Cheyenne Light, Fuel and Power. "It is serious."

Although production of natural gas in Wyoming is plentiful, prices are set by regional and national demands.

"If you're a rancher producing beef you don't just sell your beef in Wyoming. If someone across the country is paying a higher price for your beef that's where you're going to sell it," Furtney said.

Even the burgeoning coal bed methane industry in northeast Wyoming is failing to make a dent in the nation's supply.

"It's just being sucked up by this rampant growing economy that we've had and all the other forces playing into it," Furtney said.

Temperatures are expected to plunge to minus 15 in some parts of Wyoming this weekend. If the weather eventually warms for a long period, high prices likely will ease, Furtney said.

Various assistance programs are available for residents struggling with energy bills, including the Low Income Energy Assistance Program, Weatherization Assistance Program, Energy Share of Wyoming and the Senior Tax Rebate Program.

For more information, residents can call 1 (800) 246-4221.

http://www.trib.com/HOMENEWS/WYO/8EnergyPrices.html

-- Cave Man (caves@are.us), December 11, 2000.

SSB: November Was Second Coldest in 106 Years

from NGI's Daily Gas Price Index Dec 11, 2000 For those who are still scrambling for explanations on why gas prices have reached record levels, Salomon Smith Barney (SSB) meteorologist Jon Davis offered a brief synopsis last week of what happened with the weather last month. November 2000 was the second coldest November in 106 years and it was a complete reversal from November 1999, which was the warmest November in 106 years.( more )

http://intelligencepress.com/

-- Man (caves@are.us), December 11, 2000.

California's electricity shortage is due to deregulation and price controls. There were a number of plants which burned wood. But they became unprofitable and the owners went out of business. Its similar to the oil wells that were capped off in 1998 when oil was $10.00/barrel.

-- Johnn Littmann (littmannj@aol.com), December 11, 2000.

So is Global Warming starting be rather cold?

-- Malcolm Taylor (taylorm@es.co.nz), December 12, 2000.