X-Message-Number: 21937
From: "Mark Plus" <>
Subject: White House warns of shrinking gas supply
Date: Mon, 09 Jun 2003 17:34:19 -0700


June 9, 2003, 4:14PM

White House warns of shrinking gas supply
Reuters News Service
WASHINGTON - The Bush administration said today it sees only "limited 
opportunities" to boost dwindling natural gas supplies over the next 12-18 
months and called for conservation to head off a summer shortage.

Looming shortages of natural gas have grabbed the attention of U.S. 
lawmakers and administration officials, with the Energy Department slating 
an emergency meeting on June 26 to consider ways to conserve supply by 
reducing demand.

Environmental groups said the administration's move is a ploy to push for 
more drilling on protected public lands to be inserted in a wide-ranging 
energy bill now before the Senate.

Current U.S. gas inventories are about 29 percent below their five-year 
average, and spot market prices at over $6 per million British thermal units 
are double those seen last year.

Investment bank UBS Warburg today raised its 2003 price forecast for U.S. 
natural gas to $5.70 from $5.00 per million British thermal units due to low 
gas storage and weak growth in U.S. gas production.

In a letter to 30 senators released today, Energy Secretary Spencer Abraham 
said agency analysis found "limited opportunities" to boost supplies over 
the next 12-18 months.

"Therefore the emphasis must be on conservation, energy efficiency and fuel 
switching" by utilities from natural gas to coal or other sources, said the 
letter, addressed to Senate Minority Leader Tom Daschle.

The administration wants to allow more drilling on federal lands, although 
environmental groups say there is plenty of Western land open to drillers.

"We suspect this is definitely meant to influence the debate over access," 
said Patricio Silva, a lawyer with the Natural Resources Defense Council. 
"There is a wee bit of opportunism."

Lawmakers are expected to propose amendments to the energy bill to open 
federal lands in Colorado, Utah and New Mexico to oil and natural gas 
drilling, and to reconsider limits to drilling on off-shore acreage in the 
Atlantic and Pacific oceans and Gulf of Mexico, environmental groups said.

"This bill could be a real grab-bag on public lands," said Athan Manuel, a 
lobbyist for the U.S. Public Interest Research Group. "Areas that were 
off-limits are now back on the table."

Further highlighting the issue, Federal Reserve Chairman Alan Greenspan is 
scheduled to testify before the House Energy and Commerce Committee on 
natural gas supplies on Tuesday.

The central bank chief last month told Congress that dwindling supplies of 
natural gas were a "very serious problem" that could add pressure to the 
U.S. economy.

There is even talk that Congress could impose price caps if prices rise 

"If natural gas markets go wildly out of control we can't rule out Congress 
attempting to cap prices, at least temporarily," said Christine Tezak, an 
analyst with Schwab Capital Markets.

Congress could ask the Energy Department to invoke its authority to declare 
a national supply emergency and possibly bar utilities from using natural 
gas, Tezak said.

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