AGA: U.S. GAS DEMAND MAY HE FLAT IF OIL PRICES LAG

The drop in crude oil prices may mean flat U.S. demand for natural gas in 1994, American Gas Association says. AGA's base case gas demand outlook for 1994 earlier had predicted that U.S. consumption would rise 2.4% from the 20.8 quadrillion BTU in 1993 to 21.3 quads. That forecast assumed normal winter weather, a growth rate of 2.7517, for the economy, and crude oil prices averaging 516.75/bbl. An increase in gas demand would continue an 8 year trend that has seen gas consumption rise more

Dec. 20, 1993

2 min read

The drop in crude oil prices may mean flat U.S. demand for natural gas in 1994, American Gas Association says.

AGA's base case gas demand outlook for 1994 earlier had predicted that U.S. consumption would rise 2.4% from the 20.8 quadrillion BTU in 1993 to 21.3 quads. That forecast assumed normal winter weather, a growth rate of 2.7517, for the economy, and crude oil prices averaging 516.75/bbl.

An increase in gas demand would continue an 8 year trend that has seen gas consumption rise more than 25% since 1985.

Under AGA's base case projection, industrial demand, the largest area of gas consumption, would increase by almost 0.4 quads to 8.3 quads while the residential and commercial sectors would grow by 0.1 quads.

Should oil prices remain low, gas use could drop slightly in 1994.

AGA's low case assumption projects use at 20.8 quads, down 3%, if there is a 5% warmer than normal winter, 1% economic growth, and crude oil prices averaging $14.75/bbl.

And the high case outlook would see demand at 21.8 quads, up 2.3%, if there is a 5% colder winter, 4% economic growth, and $18.75/bbl oil prices.

AGA VIEWS

In a yearend statement, AGA Pres. Mike Baly said the federal government reforged its relationship in 1993 with the gas industry, giving it a larger role in achieving national economic and environmental objectives.

"As the Clinton administration was reinventing government, a spate of legislative, regulatory, and voluntary programs had a dramatic impact on how the natural gas industry operates and does business

"It was the year that the Federal Energy Regulatory Commission's Order 636 was put in place. The BTU tax was shelved. The North American Free Trade Agreement was passed. The Energy Department created the Domestic Gas and Oil Initiative, which recognizes the vital role natural gas plays in the American economy."

He said the most important environmental development for the gas industry was an Environmental Protection Agency policy change that will permit seasonal fuel switching to meet federal clean air emissions requirements. Baly said 1993 marked the first time gas drilling outpaced oil drilling in the U.S., 10,000 wells to 8,000.