You've heard talk lately about the convergence of electricity and natural gas. That idea has grown as commodity markets have matured for gas and emerged for bulk power.
A joint study by Arthur Andersen & Co. and Cambridge Energy Research Associates (CERA) cites this winter's dramatic spike in natural gas prices as evidence of a growing need for selective new investment in gas transmission and storage infrastructure. Natural Gas Trends, 1996 identifies three underlying trends:
s Surging demand is creating new bottlenecks.
s Technology is improving the competitive position of gas.
s Natural gas and electric power markets are becoming increasingly integrated.
s "This winter's big price leap is being caused by a surge of demand in eastern markets rather than by a shortfall of supply in producing regions," says Thomas R. Robinson, CERA's director for North American natural gas. "Although reliability of supply has not been threatened, the demand generated by an extended period of very low temperatures has resulted in regional transmission bottlenecks, a heavy draw on storage supplies and significant fuel-switching out of gas."
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