Economy

The industrial sector of the U. S. economy is responding to historically high natural gas prices by doing more hedging, stepping up conservation efforts, turning to alternative energy and generally “playing at the margin,” said a representative for large industrial customers at the LDC Forum in Los Angeles Wednesday

The Senate last week wrapped up two weeks of debate on the omnibus energy bill and is scheduled to vote on the bipartisan package Tuesday morning, setting the stage for Congress to pass a national energy policy for the first time in more than a decade, assuming all goes well this summer in the House-Senate conference on the measure.

Although natural gas storage levels remain adequate, high crude oil prices, a continued strong economy and the expectation that Pacific Northwest hydroelectric resources will be well below normal through mid-summer are the principal reasons the Energy Information Administration (EIA) sharply raised its gas price forecasts in its April Short Term Energy Outlook.

Although natural gas storage levels remain adequate, high crude oil prices, a continued strong economy and the expectation that Pacific Northwest hydroelectric resources will be well below normal through mid-summer are the principal reasons the Energy Information Administration (EIA) raised its gas price forecasts in its April Short Term Energy Outlook.

Despite the mixed signals in the economy, U.S.-based land and offshore drilling contractors are reporting sequential gains for services and rigs over the first part of the year, especially by aggressive independents on the hunt for natural gas. And if gas prices remain high, most of the contractors expect the domestic rig count to rise both onshore and offshore through the rest of 2003.

Despite the mixed signals in the economy, U.S.-based land and offshore drilling contractors are reporting sequential gains for services and rigs over the first part of the year, especially by aggressive independents on the hunt for natural gas. And if gas prices remain high, most of the contractors expect the domestic rig count to rise both onshore and offshore through the rest of 2003.

Argentina’s scrambled economy that has drawn front-page attention from some major U.S. financial news media so far does not worry San Diego-based Sempra Energy, which has significant interest in two natural gas utilities.

Based on the recent resurgence in the U.S. economy and the technical gas futures rally sparked in part by a surge in oil prices, Salomon Smith Barney (SSB) analyst Robert Morris has raised his natural gas price forecast for 2002 and 2003, joining the ranks of other investment analysts. Earlier last week, Raymond James & Associates analyst Wayne Andrews cited stronger supply-driven fundamentals as a reason for his more bullish near-term gas outlook for higher prices during the second and third quarters.

A major new pipeline project to serve the California market has fallen by the wayside, the victim of lower demand, according to sponsors Kinder Morgan Energy Partners LP (KMP) and Calpine Corp. The two companies said they were dropping their $1.7 billion, 1,030 mile proposed pipeline that would have run from the San Juan Basin in New Mexico to Needles and Topock near the California border.