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NGC Warns Clinton, Congress of Sharply Higher Gas Prices

NGC Warns Clinton, Congress of Sharply Higher Gas Prices

The Natural Gas Council on Friday warned the Clinton Administration and Congress of abnormally high natural gas prices this winter and requested additional funding for the Low-Income Home Energy Assistance Program (LIHEAP) for low-income households.

The Council, which is a group of senior executives representing all sectors of the gas industry, also urged the president to convene a special meeting between the administration, the council and Canada's National Energy Board to "discuss issues affecting natural gas in the near term and actions both industry and governments can take to ensure adequate supplies are delivered to markets."

"The United States currently imports 14% of our natural gas from Canada, and the National Petroleum Council estimates that we will increase our imports from Canada by 33% in the next 10 years," the council noted. "But concerns are being expressed in the U.S. media about the available supply for this winter's heating season, and although we are confident that enough natural gas exists to serve the market, an open dialogue between governments and industry could help our understanding of the supply situation, in addition to helping shape future agreements to further improve our working relationships."

In letters to both House Appropriations Chairman C.W. Bill Young (R-FL) and Senate Appropriations Chairman Ted Stevens (R-AK), the council explained that the price of natural gas in the spot and futures markets has reached record levels because of strong demand due to the robust economy and the drilling decline of the past two years during a period of sharply lower prices.

"The good news is that producers are already vigorously competing with each other to increase gas supplies..... However, due to the continued high demand for natural gas and the historic time lag between increased drilling activity and a price response, consumers may pay significantly more for each unit of natural gas this winter than they did last winter."

The Council urged the lawmakers to order the early release of emergency LIHEAP funds. "Just as electricity bills are hitting Californians hard this summer, consumers in the Northeast and Midwest regions may face high heating bills this winter," the council told the president. "In addition, we are concerned that the Administration's request for FY2001 ($1.1 billion, with $300 million available for emergency release) may not be adequate..... Current LIHEAP funding can serve only 12% to 15% of eligible households and these recipients could need up to 35% more assistance this winter."

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