With a little holiday cheer, the American Gas Association handedout an extremely optimistic 1999 gas consumption forecast last weekas a gift to those whose spirits may be down with gas demand thisChristmas season. The association told those attending its year-endreview conference in Washington, D.C. to expect 5% growth inconsumption in 1999, led by a 13% increase in the residentialsector and a 6.8% jump in the commercial sector. This rosy glow,however, would be fueled by normal weather, something that’s beenin short supply over the past year. Given above normal wintertemperatures next year (10% fewer heating degree days) and severalother negative factors such as $10/bbl oil prices, AGA expects an0.4% drop in gas demand.

The 10-year average of gas demand growth is 2.8% per year, butdemand this year is down 2% from last, which in turn fell shortfrom the previous year by about 0.1%. The association sees thereturn of normal weather putting demand back in line with thegrowth trend of the early- and mid-1990s. It’s base-case forecastof 23.23 quadrillion Btus (roughly 23.22 Tcf) is only 3% more than22.54 quads of gas consumed in 1997, AGA noted.

AGA said the electric utility sector is expected to cool downsomewhat next year from the 11% growth experienced this year andsoak up 3.50 quads of gas, or 3.5% more than in 1998. Theindustrial sector is expected to show a modest 1.1% growth to 8.94quads because of the slow-down in the economy. But in the base casethe residential and commercial sectors are expected to grow to 5.32and 3.44 quads, respectively, from an estimated 4.70 and 3.22 quadsin 1998.

Observers may want to consider, however, AGA’s 1998 base caseforecast released last December was off by 1.18 Tcf, or about 5.3%higher than actual gas demand. The association forecast 23.3 quadsof gas would be consumed this year. And its mid-year base caseforecast, which called for 22.58 quads of gas demand in 1998,overestimated consumption by roughly 460 Bcf (0.46 quads). The warmweather this year is expected to cause a 2% drop in totalconsumption, which will end the year near 22.12 quads. Temperaturesduring the fourth quarter are expected to be 9.1% warmer thannormal.

Rocco Canonica

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