Natural gas prices rising Normally low summer bills may pack punch Source: Chicago Sun-Times Publication date: 2000-06-20

While everyone's attention is focused on the price of gasoline at the pump, the cost of natural gas has quietly soared and is likely to stay high for the rest of the year. Natural gas prices have almost doubled this year. Unlike past years, charges are rising rather than falling this summer.

Residential customers expect their gas bill to fall in June. But this month's bill is apt to be higher than last year's, said Michael O'Mary, spokesman for Nicor, which supplies natural gas to much of Northern Illinois. High costs now likely mean even more expensive gas once cold weather returns.

Gas that cost as little as 23 cents per therm-a measure of natural gas energy-in April 1999 will cost residents 45 cents this month, Nicor says.

"We are trying to prepare people for the possibility that bills will be significantly higher next winter," O'Mary said. "Now is the time that (natural) gas prices are usually low, not rising."

The government is predicting natural gas prices will continue to go up.

"Our projections for the winter are indicating people are going to pay more to heat their homes," said Jonathan Cogan, a spokesman for the U.S. Energy Department. "We are not forecasting shortages, necessarily."

Cogan said several factors are propelling natural gas higher.

Chief among them is the warmer than usual weather in key areas of the United States-witness 103-degree temperatures in San Francisco last week.

Utilities around the country have invested in gas-fired power generators that switch on only when energy demand is highest. Those power plants consume massive amounts of natural gas as customers turn on their air conditioning.

The weather's timing could not be worse.

Utilities typically buy natural gas during the summer when the price is low, then inject it into underground storage fields for use in the winter. This year the gas that should be stored is instead consumed to make electricity.

In May the natural gas industry stored 54 billion cubic feet of gas a week. A year earlier it was storing 74 billion cubic feet of gas a week.

Bob Gilpin, vice president of Unicom Energy, said the unusually mild winters of the last three years have also led to high gas prices now. Unicom Energy sells natural gas to businesses.

"We had such depressed gas prices over the past three years that producers have not had incentive to drill new wells as we would have liked," he said.

Current high prices are an incentive to develop gas fields, and producers are exploring more actively. At the start of this month, a record 668 drilling rigs were in operation looking for gas, up from 421 a year ago.

But expect no relief any time soon.

"It takes about a year to 18 months to get a field online," Gilpin said. "It is not going to happen this fall."

http://cnniw.yellowbrix.com/pages/cnniw/Story.nsp?story_id=11455316&ID=cnniw&scategory=Energy%3ANatural+Gas

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