Natural gas is the common denominator that will “foster allreasonable wishes” of environmental groups and still support majorand sustained economic activity for the foreseeable future,according to a University of Houston economics professor who so farhas been on target in his predictions about energy.

Michael J. Economides, who two years ago predicted the return of$30-plus prices for a barrel of oil and last year said that naturalgas would “definitely” be selling at $4 Mcf or more this winter,presented a paper on the revolution of natural gas at the Societyof Petroleum Engineers conference this week in Dallas.

Although it’s not well understood, he said that “ironically,”natural gas will be the fuel of what he and other researchers arecalling the “hydrogen economy,” referring to new fuel celltechnology expected to power future vehicles among other things. Heco-authored “Natural Gas: The Revolution is Coming” with R.E.Oligney and A.S. Demarchos.

“By 2005, the age of hydrogen will dawn, pushed first by fuelcells running on natural gas or natural gas liquids,” Economidessaid. This age will come about because the major vehiclemanufacturers already are fine tuning fuel cell powered vehicles.

“A careful check of the fine print in the advertising for thenew fuel cell electricity generator reveals that the fuel cell runson hydrogen that is extracted from natural gas or propane. Naturalgas is the common denominator among a flurry of conflictingopinions on oil prices, energy supply, fuel cells, global warmingand economic development.”

Pointing to a “clear momentum toward natural gas in the mostinfluential of all markets, the United States,” Economides saidthat “oil and gas companies will produce massive volumes of naturalgas from deep offshore Gulf of Mexico. The necessary lease rightsare in hand, and natural gas is already on an unstoppable path tobecome the fuel of choice for space heating and power generation.”He also predicted more development in Canada and Alaska.

Along with fuel cell developments, deregulation will acceleratethe transition to natural gas as the “basic fuel” of the U.S.economy, and will “erode the market shares for coal and nuclearpower” as new power plants, mostly fueled by natural gas, areconstructed.

New power capacity will be a problem in the next 10 years, saidEconomides, because even when turbine manufacturers catch up intheir three-year backlog of orders, the demand for gas will causesubstantial shortages for “considerable” amounts of time throughboth summer and winter peaks.

“We believe that the euphoria of deregulation and intensecompetition for a share of the emerging market will result inexcess capacity in the near-term,” said the co-authors. This couldresult in higher electricity prices for the short term, butoverall, once the construction is completed and the market isstabilized, Economides and his team said they expect electricityrates to fall by as much as 30%.

The biggest drawback will be in the political arena. “Buildingand facilitating natural gas infrastructure and the adroit use oftaxes and tax incentives can play a very constructive, substantiverole in a social and economic transformation during the 21stcentury.”

©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.