U.S. stuck with high natgas prices, low supplies-EIA

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UPDATE 1-U.S. stuck with high natgas prices, low supplies-EIA Reuters Company News - December 12, 2000 11:09

Copyright 2000 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. (adds comments from Richardson)

By Tom Doggett

WASHINGTON, Dec 12 (Reuters) - The United States will face soaring natural gas prices for the foreseeable future because of continued low gas supplies, a top U.S. government energy official warned on Tuesday.

"High and volatile gas prices will prevail until significantly more gas supplies enter the market, although the likelihood of that in the near future is not high," Mark Mazur, acting head of the U.S. Energy Information Administration, told a Senate committee looking into the natural gas market.

This winter is forecast to be colder than the last three winters, resulting in a 6 percent increase in natural gas consumption over last year, Mazur said.

Natural gas prices were currently running above $9 per thousand cubic feet, almost four times higher than during the same period a year ago.

Mazur said natural gas prices would remain above $4 per thousand cubic feet at least through the rest of 2001.

Separately, U.S. Energy Secretary Bill Richardson has warned electricity generators not to purposely drive the price for power in the West higher.

The West is experiencing tight power supplies and soaring electricity prices because of heavy demand due to cold weather. Richardson called on generators to act responsibly.

"While I have no specific knowledge of any such activities, it is important that generators located throughout the region and in Canada and Mexico understand that the (Clinton) administration will not tolerate any actions designed to take advantage of the situation," Richardson said on Monday night.

He again called on the Federal Energy Regulatory Commission to impose short-term prices caps on the wholesale power sold throughout the West.

"Given recent developments in the Western power markets, it is even more urgent that FERC act expeditiously to impose some constraints on spiraling electricity prices, not just in California but throughout the region," Richardson said.

"Electricity supplies in parts of the region are tight and the prices charged for wholesale power in the region continue to spiral out of control," he added.

Richardson pointed out several steps the Energy Department has taken to increase electricity supplies in the West:

*Ordered both the Bonneville Power Administration and the Western Area Power Administration to provide as much power to California as possible during supply shortages.

*Ordered federal facilities in California and four other western states to reduce electricity consumption.

Richardson criticized Kaiser Aluminum Corp. for "taking advantage" of high market prices for electricity in the Pacific Northwest.

Kaiser announced it would shut down operations in the region and re-sell power it purchases from the Bonneville Power Administration for prices well in excess of what the company pays.

"While Kaiser will make millions from the use of a federal resource, I am concerned that this is coming at the expense of employees that will be out of work and that may not be fully compensated," Richardson said.

Richardson said he has instructed Bonneville to "explore all necessary actions to prevent Kaiser from remarketing this power."

http://www.hoovershbn.hoovers.com/bin/story?StoryId=CoJwW0b9DtJeYotq3nte&Print=1&&Nav=

-- Martin Thompson (mthom1927@aol.com), December 12, 2000


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