By Patrick Connole
WASHINGTON
(Reuters) - The U.S. government on Wednesday warned consumers
of soaring natural gas prices this winter amid forecasts for cold
weather and tight supplies, which have already forced California
utilities to seek curbs on Christmas lights.
The typical
American household will pay a record $834 to heat its home with
natural gas this winter, up 62 percent from last year.
Consumers
who use heating oil will also pay a record $1,044 for fuel to
warm their homes this winter, up 38 percent from one year ago,
the Energy Information Administration said.
The EIA, a
statistical agency within the Energy Department, said spot natural
gas prices were at record highs based mainly on apprehension about
tight supplies for this winter season.
``The low
gas inventory situation, combined with fickle weather, has put
the market in a very jittery position,'' the EIA said. ``Cold
weather for prolonged periods this winter would strain supplies
and could result in even higher spot prices.''
California
has been experiencing sharper price rises than the rest of the
country, exacerbating an already tight electricity supply situation.
Chaos on the
state's power grid was so precarious Tuesday evening that Gov.
Gray Davis, at the annual Christmas tree lighting in Sacramento,
switched the tree's lights off after just a few minutes to save
energy.
The start
of Wednesday was no better when California power industry officials
issued a Stage Two power emergency, cutting supplies to industrial
customers due to a severe shortage of available electricity.''
It was the
third consecutive power emergency in as many days, as the state's
power plants -- many shut for repairs -- and power imports from
other states barely kept up with demand.
Stocks
Down, Prices Up
The government's
warning of record consumer bills for natural gas this winter plus
worries about a cold snap sent U.S. wholesale prices rocketing
to new highs.
Natural gas
futures on the New York Mercantile Exchange closed up $1.101 at
$8.485 per million British thermal units. Earlier in the day,
prices hit a record high of $8.80 per Btu.
The EIA projected
U.S. natural gas supplies in storage would decline to 0.64 trillion
cubic feet (tcf) at the end of first quarter 2001, about half
as much supply when compared to same period of 2000.
``Spot gas
prices at the (producer) wellhead have never been this high for
such a sustained period of time,'' EIA said. ``Cold weather for
prolonged periods this winter would strain supplies and could
result in even higher spot prices.''
Tight supplies,
however, have made it profitable for companies to step up drilling
for natural gas, the government said. Based on recent U.S. drilling
activity, there should be about 15,000 gas wells completed in
2000 and 2001, the highest level since 1985.
California
Facing Dire Condition
California
came dangerously close late Tuesday to the most severe alert --
a so-called Stage Three emergency which would trigger rotating
blackouts of entire neighborhoods to prevent the collapse of the
entire grid. A statewide Stage Three emergency has never been
declared.
The government
noted the dire straits in California, saying high demand for natural
gas-fired electricity, relatively cold weather and demand surges
have sparked the latest round of emergencies.
Energy Secretary
Bill Richardson earlier this week ordered federal facilities in
California to cut back on power and diverted power from the Glen
Canyon dam in Arizona.
Richardson
has warned in the past that a lack of coordinated congressional
action on revamping the nation's power sector, along with market
conditions in the West and other regions, could lead to power
shortage alerts.
|
