Hurricanes push up natural gas prices

By CMTA Staff

Capitol Update, Sept. 23, 2005 Share this on FacebookTweet thisEmail this to a friend

With 20 percent of the nation's natural gas production coming from the Gulf Coast, the one-two punch of Katrina and Rita will have a significant impact on natural gas prices.  This in turn will impact electricity rates, especially in California where 40 percent of the state's power plants are fueled by natural gas.

The two hurricanes underscore the fact that California needs additional natural gas supplies in the immediate future.  Increasing demand has caused the price of natural gas to more than double since 2001.  Projected natural gas shortages will further increase natural gas and electricity prices, threatening the California economy and harming consumers.

The recently-released draft of the California Energy Commission's 2005 Integrated Energy Policy Report (IEPR) notes the absence of an adequate natural gas supply in California and the potential of liquefied natural gas (LNG) to shore up supplies.  It states, in part, that "the uncertainty of supplies and increases in prices underscore the need for California to focus on actions within its control, specifically to find alternative sources of natural gas.  LNG, in particular, offers significant potential&ldots;.."
 
According to the report, California currently generates only 13 percent of the natural gas it consumes, and demand is expected to grow significantly within the next 10 years.  Bringing LNG to California could help meet this growing demand and reduce the potential for price volatility that negatively affects businesses, residents and the economy.

"LNG is the solution to today's high prices and tomorrow's shortages," said Dorothy Rothrock, V.P., Government Relations at CMTA, and Chair of Californians for Clean Affordable Safe Energy (Cal-CASE), an alliance of 65 organizations, businesses and associations dedicated to securing California's energy future.  "If we do not move now to bring LNG to California, the gap between supply and demand will continue to widen - and consumers will pay the price."

A series of meetings have been scheduled to address specific chapters in the 2005 IEPR.  The natural gas chapter will be taken up in a hearing on Friday, October 7th at the California Energy Commission.
 
Cal-CASE's growing coalition includes the California Chamber of Commerce, the California State Association of Counties, the California Restaurant Association, the Los Angeles Economic Development Corporation, the California Farm Bureau Federation, Consumers First, School Project for Utility Rate Reduction, the Greater Redding Chamber of Commerce, the San Diego Regional Chamber of Commerce and the California Council for Environmental and Economic Balance.

Cal CASE website
 
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