[A-List] US economy: energy crisis

["Michael Keaney" <michael.keaney@xxxxxx>]

US to focus on conservation to avert gas crisis
By Demetri Sevastopulo in Washington
Financial Times; Jun 27, 2003

The Bush administration would seek to ward off a potential natural gas
crisis by concentrating on energy conservation rather than efforts to
increase supply, Spencer Abraham, energy secretary, said on Thursday.

At an emergency meeting of the National Petroleum Council, Mr Abraham said
the government would focus on demand-side measures to try to curtail a rise
in natural gas prices. He said higher prices could mean that US consumers
this winter would pay 19 per cent more than a year ago to heat their homes.

Natural gas prices have doubled from a year ago as domestic production and
imports have lagged behind demand, although state regulations generally
insulate residential consumers from the worst of the cost increases.

Alan Greenspan, Federal Reserve chairman, warned this month that continued
elevated prices could have a stifling effect on the US economy.

The US has encouraged increased use of natural gas in recent years, with 95
per cent of new power plants being fuelled by gas. But with consumption of
natural gas expected to increase by around 50 per cent over the next two
decades, the country will need to act to ensure a sufficient supply.

Mr Abraham rejected demands by the chemical industry, the largest user of
natural gas in the US, to suspend environmental regulations on
coal-generated electricity in order to reduce the pressure on gas prices.

The American Chemistry Council, which represents the chemical industry, had
urged the government to take emergency actions to increase supply in
addition to encouraging energy conservation. "Absent emergency actions, the
nation will enter the winter heating season without enough gas to go
around," Greg Lebedev, chief executive of the ACC, this week wrote in a
letter to Mr Abraham.

"In that case, high natural gas prices will drive additional industrial
production offshore, creating another terrible blow to the manufacturing
sector of the economy, a sector already struggling to survive," he added.