Rising natural gas prices leaving business behind

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Rising natural gas prices leaving business behind Published Thursday, December 21, 2000 12:00:00 AM

By Andrew Wainer

Staff Writer

California's soaring natural gas prices have forced local businesses to cease production and consider layoffs in a fight for survival.

Higgins Brick Co. in Chino Hills shut down Wednesday and will not reopen until at least February, co-owner Josh Higgins said.

He said the year's more than fourfold increase in natural gas prices has made it unprofitable to continue.

"It's outrageous," Higgins said. "We'd spend $3 9 (million) to $4 million per year on natural gas at the current price."

Higgins said he has not laid off employees yet but could be forced to drop workers next year.

Large businesses, such as Higgins', have been hardest hit by the gas increase because they buy on the open market, which is subject to wide fluctuations. Small business and residents, which have long-term contracts with gas delivery companies, are able to avoid those wild variation in prices.

But even small businesses and residential consumers have seen prices rise to record levels this year.

The increase for long-term customers from less than 20 cents per therm of natural gas in January to about 65 cents per therm today is due to a deregulated market and an increase in electricity use, Pomona College geology Professor Richard Hazlett said.

Deregulation of the state's energy over a decade ago forced consumers to purchase it on the open market with no price controls, Hazlett said.

He also blamed the Internet, which soaks up an increasing amount of electricity and the natural gas used to generate it.

Southern California Gas Co. public relations manager Robert Cruz agreed with Hazlett's reasoning and added that the recent cold weather nationwide has further strained supply.

Cruz's company was the subject of a class-action suit filed on Monday blaming the rising gas bills on a conspiracy of the state's largest gas providers to gouge prices.

The parent company, Sempra, denied it violated the law.

Southern California Gas Co. public affairs official Dennis Lord said Wednesday the increasing costs were beyond his company's control. "With deregulation, we pass the costs through to customers," Lord said. "We don't have control over market pricing."

Lord said ravenous demand for gas nationwide, and the problems it has caused, will likely provoke government intervention.

"There will be a lot going on at the federal and state level," Lord said. "There is a lot of talk about re-regulation these days."

In the meantime, business and government organizations have programs in place to help residents who can't afford to shut off the heat and wait out the high gas prices.

The Southern California Gas Co.'s Direct Assistance Program provides free help to low and fixed-income residents to make their homes better at retaining heat and keeping out cold.

Services include furnace repair and replacement, home insulation and weather stripping doors and windows.

Andrew Wainer can be reached by e-mail at a_wainer@dailybulletin.com or by phone at (909) 483-9328.

http://www.dailybulletin.com/news/articles/Risingna.asp

-- Martin Thompson (mthom1927@aol.com), December 21, 2000


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