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Greenspan Predicts High Natural Gas Prices Into Next Year
WASHINGTON -- Federal Reserve chairman Alan Greenspan predicted tight supplies of natural gas and high prices for a prolonged period Tuesday, largely because -- unlike oil -- the U.S. market is unable to draw on world gas supplies easily. "We are not apt to return to earlier periods of relative abundance and low prices anytime soon," Greenspan said in testimony prepared for a congressional hearing. He noted that the markets are anticipating natural gas prices of more than $6 a thousand cubic feet well into next year. Market expectations "imply a 25 percent probability" that the peak price natural gas on the wholesale market exceed $7.5 per thousand cubic feet by next January, in the middle of the winter heating season, Greenspan said. Greenspan said that already the increase in gas prices - more than double what they were last year - "have put significant segments of the North American gas-using industry in a weakened competitive position" against industries overseas. "Unless this competitive weakness is addressed, new investment in these technologies will flag," Greenspan said in remarks for an appearance before the House Energy and Commerce Committee. Greenspan did not specifically address whether these problems, affecting especially the chemical, fertilizer, steel and aluminum industries, might hinder economic recovery. Earlier, the Energy Department said that extremely short supplies of natural gas in storage will result in high prices to continue through this year and into 2004. Gas stocks in storage were 38 percent below what they were last year and 28 percent lower than the five-year average. "An abnormally hot summer, followed by a cold winter could push natural gas deliverability to the limit and cause record high prices," Guy Caruso, head of the government's Energy Information Administration, told a congressional hearing. Greenspan said the supply and price problems stem from "a modest gap" between growing demand for the environmentally friendly fuel and supplies that are limited. "Rising demand for natural gas, especially as a clean-burning source of electric power, is pressing against a supply essentially restricted to North American production," said Greenspan. Copyright Associated Press
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