Federal Reserve Chairman Alan Greenspan will join producers and consumers this week in testifying on the increasingly critical natural gas supply situation before the House Energy and Commerce Committee.

The committee announced Thursday the hearing will be held Tuesday, June 10 at 10 a.m. EDT on “Natural Gas Supply and Demand Issues.” The witness list also includes Guy Caruso, head of the Energy Information Administration, Richard Sharples, senior vice president of Anadarko Petroleum, Commissioner Donald Mason of the Public Utilities Commission of Ohio, Glenn English, head of the National Rural Electric Cooperative Association and others. The list has not been finalized, a spokesperson said.

The announcement came as the Energy Information Administration (EIA) released another Short-Term Energy Outlook Friday, predicting continuing short supply and high prices. The agency expects spot natural gas prices to remain between $5.50 and $6.00/MMBtu through the rest of 2003 because of the low level of gas in storage.

The price forecast is based on normal weather. “Above average prices and strong gas-directed drilling efforts this year will be needed to ensure that gas in storage reaches at least minimally adequate levels by the beginning of the next heating season. If adverse weather intervenes, the task could be made more difficult and even place additional upward pressure on prices,” EIA said.

Energy Secretary Spencer Abraham, commenting on the latest outlook, noted he had called a special meeting of the National Petroleum Council for late June to “discuss problems and solutions and identify those actions that can be taken immediately to ease short-term supply constraints. The challenge requires us to act today.” The meeting will be held June 26.

EIA noted that the natural gas spot price at the Henry Hub has remained well above $5/MMBtu on a monthly basis since the beginning of the year and was above $6 in the first week of June.”

Natural gas prices will likely remain high as long as above-normal storage injection demand competes with industrial and power sector demand for natural gas. Above average prices and strong gas-directed drilling efforts this year will be needed to ensure that gas in storage reaches at least minimally adequate levels by the beginning of the next heating season,” the Outlook said.

Commenting on Greenspan’s appearance before the energy committee, American Gas Association Spokesperson Peggy Laramie said “I hope this gets the message across to the Senate,” which is working on an energy bill, “that something needs to be done about natural gas supply.” Financial measures in the bill being debated on the Senate floor to help independents can do things such as encourage increased production from marginal wells, “things that can make a lot of difference.”

Greenspan commented late last month in testimony before the Joint Economic Committee that he was becoming concerned about the natural gas supply situation. “I’m quite surprised at how little attention the natural gas problem has been getting, because it is a very serious problem,” the chairman said (see NGI, May 26). He pointed to low storage and declining production.

Meanwhile, AGA is working on a comprehensive communications outreach program for its members similar to one the association launched in the summer of 2000. “By the time winter comes consumers need to be informed, so there won’t be any surprises,” Laramie said. While the industry and large end users currently are aware that gas prices are high, consumers will mainly find out when they get their first real winter bill at the end of November. “We don’t want it to be a shock.”

Laramie said AGA is working with the Independent Petroleum Association of America to ensure consistency in the message they deliver to the national and local media. “We’re telling consumers why prices are high and that it won’t be limited to this year. This is going to be a problem for three to five years,” until actions by Congress and the federal government work to mitigate the inequality of supply and demand.

AGA will be sponsoring a web site to answer consumer questions and will make suggestions to its members about messages to the public they can include with utility bills.

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