Manufacturers getting slammed by high gas prices

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Washington (Platts)--17Jan2001

Soaring natural gas prices are having a "devastating effect" on industrial end-users across the US, many of which have been forced to close down, cut production, raise product prices or lay off workers, according to Jerry Jasinowski, president of the National Assn of Manufacturers. Citing a recent NAM survey of 737 firms, Jasinowski told a Washington, DC, news conference Wednesday that many industrial end-users will be "in even bigger trouble" without short-term and long-range measures to offset high gas costs. "Manufacturers consume 26% of the natural gas used in the US, so they face serious economic consequences from the extraordinary rise in prices," he said. More than a quarter of large gas-dependent manufacturers report that they've curtailed operations, according to the NAM survey. Jasinowski said 6% of firms surveyed already have laid off employees and another 10% said they expect layoffs as a direct result of surging gas costs, which he said are up an average 139% over a year ago. And given the competitive business climate, less than 10% of firms said they can pass more than a quarter of their increased gas costs to customers. As a result, manufacturers have seen their profits reduced by an average of 14%, with the worst yet to come, Jasinowski said. He said NAM wants immediate relief in the form of a broad-based tax cut -- like that proposed by George W. Bush -- in order to "offset the effective tax increase caused by high energy prices" and rising interest rates. NAM also wants more federal lands opened to gas exploration-and-production to avert future energy crises.

James Vinke, chief executive of Redland Brick Inc of Maryland, told the news conference that his plants, which consume about 700,000 Mcf/year, are paying double or triple the amount for gas they paid a year ago, which "is obviously devastating to our bottom line." He said his overall energy costs in 2001 are expected to double to $4-mil. "We anticipate serious disruptions to our industry if natural gas prices don't abate in the next few weeks or months," Vinke asserted. But "we do not expect the situation to improve significantly in the near future." Gary Huss, president of Hudap

http://www.platts.com/stories/gas3.html

-- Martin Thompson (mthom1927@aol.com), January 18, 2001

Answers

Just received my gas bill. THE ONLY gas appliance I have is a GAS water heater that provides hot water for TWO people. It doubled over last month. It makes me want to take it out and replace it was an electric water heater.

Its so strange that the bulls are still rocking and rolling on Wall Street because they sweep issues like this under the rug.

-- Guy Daley (guydaley@altavista.com), January 18, 2001.


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