AGA: U.S. USE TO MAINTAIN GROWTH PATTERN

U.S. gas consumption in 1994 appears certain to continue a 7 year upward trend, taking the country's gas use to its highest level since 1973.

So concludes the midyear demand outlook of the American Gas Association.

AGA predicts U.S. gas demand this year in a base case scenario likely will increase to 21.6 quadrillion BTUS (quads), 4% more than in 1993. Late last year AGA set a base case outlook for U.S. 1994 gas demand of 21.3 Quads.

AGA's midyear base case assumes normal weather for the rest of the year, real economic growth at a rate of 2.75%/year, and an average oil price of $17/bbl for second half 1994.

U.S. gas use in the past 8 years has grown nearly 25%, to 20.8 quads in 1993 from 16.7 quads in 1986.

AGA's midyear report said U.S. gas use in first quarter 1994 increased at a rate 4% higher than in the same period 1 year earlier, mostly because of a 3.4%/year rate of economic growth. Among major gas markets, commercial gas consumption was 7% higher than in first quarter 1993, residential demand 6% greater, and industrial gas use 4% higher. AGA attributed a 3% first quarter decrease in gas use among electricity generators to low oil prices, which languished around $13/bbl during January-April and increased to about $19/bbl in May and June before surging to the current level of about $20/bbl.

VOLUMETRIC INCREASES

In AGA's base case, gas use in U.S. industrial markets, driven by strong growth in manufacturing and exports, will increase in 1994 by 0.3 quads and in the commercial and electric utility sectors 0.2 quads each. AGA projects residential gas use, where growth tends to be somewhat offset by better energy efficiency in existing homes, will grow about 0.1 quad.

AGA Pres. Michael Baly said U.S. commercial and residential gas demand has strengthened because of the fuel's environmental advantages and new technologies being introduced on more responsive, competitive gas markets.

"In 1993," Baly said, "natural gas captured a 66% heating market share of new single family housing completions and 64% of all new housing completions. This trend of natural as dominating the residential market is expected to continue in 1994."

In addition to 4% demand growth in its midyear base case outlook, AGA's midyear report projected low case demand growth in 1994 of 3% to 21.4 quads and high case growth of 5% to 21.8 quads.

The midyear low case assumes 7.5% below average heating degree days and $14/bbl crude oil for the rest of the year and a 1.5% rate of economic growth in second half 1994.

Midyear high case projections are based on 7.5% above average heating degree days, $20/bbl oil for the rest of this year, and economic growth at a rate of 4%/year in second half 1994.