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CEC Remains Concerned about Continuing High Gas Prices

While using 2003 forecast data for the most part, the California Energy Commission (CEC) recently released its latest natural gas assessment, reiterating concerns and observations from last year -- mainly about continued historic high wholesale prices and the need for some combination of demand-response and new supply imports to meet future demand.

Updated projections for the state's gas demand, supply and prices will be included at the end of the year in the CEC's 2005 Integrated Energy Policy Report.

The latest CEC staff report puts California's current total natural gas consumption at 2.2 Tcf annually, with the projection for continued annual growth at about the 1% level through 2013. The state's industrial and electric generation sectors consume 66% of that total demand, and the generation sector continues to be the fastest growing.

Wholesale natural gas prices in California and the United States have doubled since July 2001, the CEC staff report said.

"The CEC is concerned about the impact of recent increase in natural gas prices, which in 2004 were double what they were in 2002 and earlier years, upon California consumers and [the] state's economy," the report said, noting that continued tight gas supplies in North America keep prices high.

Four options are discussed for addressing the rising prices, with the demand-side taking top priority:

At the same time, the report noted that California increasingly is in more competition among western states for obtaining these new gas sources because of the rapid population growth in adjoining states such as Arizona, Nevada and Utah.

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