Nine consecutive weeks of sizable, if not record, builds to natural gas storage inventories appear to be lessening some of the concerns about supply levels for next winter, but major industrial gas customers aren’t feeling any easier.

While the rise in gas stocks is good news, “the bad news is why” the large inventory injections have occurred, said Paul N. Cicio, executive director of the Industrial Energy Consumers of America (IECA) in a letter Friday to Congress and state governors.

According to the Energy Information Administration, “natural gas inventories did not [rise] because of increased natural gas production, but because of ‘demand destruction’ by manufacturing,” he said. Demand destruction normally occurs when gas prices rise to a level that the manufacturing sector can no longer afford to pay.

“These sustained high prices mean that the U.S. will remain an unattractive place to manufacture. Make no mistake, the natural gas crisis is not over. For the first time in modern history, prices are higher here than in Europe, Brazil and even energy-deficient China,” Cicio wrote.

“You have the ability to restore balance to our natural gas supply” by allowing domestic producers to develop the “abundant” resources that are locked up on federal lands, he to told federal and state lawmakers. “Neither conservation nor reliance on imports of LNG [liquefied natural gas] alone will save us.”

The industrial group echoed similar sentiments in a letter to Energy Secretary Spencer Abraham earlier in the week. It charged that the federal government’s reliance solely on conservation and demand-side management to cut gas consumption would reduce the supply situation to a “game of chance” and threaten the nation’s industrial base (see Daily GPI, July 17).

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