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GRI: Low Energy Prices Are Coming

Fortnightly Magazine - October 15 1995

The Gas Research Institute (GRI) thinks total natural gas demand, driven by strong underlying economic activity, could grow to more than 29 quads by 2015, a 1.5-percent yearly increase from 1994's 21.4 quads (see, Baseline Projection of U.S. Energy Supply and Demand, GRI, 1996 ed.). This latest projection "describes an era of low energy prices, not just low oil prices," said Paul D. Holtberg, GRI executive economist, baseline analysis.

According to the report, gas demand for electric generation will account for half the growth. Electric restructuring will focus industry efforts on maximizing the use of existing capacity. In response, gas industry research and development and infrastructure requirements will shift from serving new, gas-fired generating capacity to servicing the expanded use of existing capacity.

The report cautions, however, that the gas-supply outlook depends greatly on continued advances in supply technology. Also, the trend in gas transportation charges will play a critical role. Declining transportation and delivery charges are expected to offset near-term gas acquisition price hikes, but new technology and increasing gas sales will be critical to containing gas transportation charges.

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