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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: long-gone who wrote (55230)	6/27/2000 9:24:00 AM
From: Alex	Respond to of 116753

Oil veteran warns of pricey winter Advises industry to pree consumers STEVEN CHASE Alberta Bureau Tuesday, June 27, 2000 Calgary -- Soaring natural gas prices are likely to hit consumers in the wallet this winter -- and a veteran Calgary oil executive says the industry should warn Canadians now to prevent a backlash from Ottawa later. "It is important that we communicate early so that the public and the government don't feel that once again they have been blindsided -- taken off-guard," Jim Gray, chairman of Canadian Hunter Exploration Ltd., told a business audience yesterday in Calgary. "In those circumstances, in the past, we have experienced inappropriate government reaction. Let's learn from those past experiences." In an interview following his speech, Mr. Gray declined to elaborate on what sort of government backlash the natural gas industry might face -- such as price caps or regulated pricing. "Everybody in our industry understands what inappropriate government action means," he said. The spectre of Ottawa's most notorious "inappropriate action" still casts its shadow over Calgary: the much-reviled National Energy Program, an ill-fated attempt by Pierre Trudeau's Liberal government to control the oil patch in the early 1980s. It's not yet clear how hard price increases will hit consumers this fall and winter. But Alberta spot gas prices are up almost 100 per cent from the same time last year. Spot prices in Alberta for gas have soared more than 90 per cent from one year ago. And the trend is more than short term. Five-year forward prices are up 40 per cent as of late June from the same time 12 months ago. This doesn't mean natural gas heating bills will automatically double next winter because fuel makes up only part of the bill. Consumers also pay the cost of transporting the gas, which is a much less volatile charge. Still, Mr. Gray fears natural gas producers could suffer some kind of backlash if Ontario consumers open their gas bills this winter without prior warning that prices will be higher. "It has been my experience, over a long period of time, that whenever the consumers -- read, voters -- in Central Canada . . . get surprised by sudden upward fluctuations in energy prices, bad things happen. We should not ignore those lessons of history," he told The Globe. Mr. Gray's gas price warnings come as North America struggles to boost its natural gas production levels amid rising demand for the commodity fuelled by the growth of gas-powered electrical plants. This is part of a trend that will see traditional North American natural gas supply "basins" increasingly tapped out -- requiring more and more wells and investment to keep extracting sufficient amounts of gas from them. "I believe that the strongest likelihood over the next five to 10 years is that North American supplies will continue to tighten as demand continues to rise and supply from conventional U.S. and Canadian basins stabilizes or begins to falter and gradually decline," Mr. Gray said in his speech. Alaska and Canada's north hold the promise of massive new supplies of gas, but Mr. Gray pointed out these will require up to a decade to tap. "Even with more enthusiastic and co-operative northern governments, it will take considerable time and big bucks to connect that gas to our present pipeline grid," he said. Mr. Gray said he wants to urge gas producers to keep working hard to find new supplies of gas and also to warn them to give consumers a heads-up on the potential for higher prices ahead. "If the supply-demand situation tightens, resulting in higher natural gas prices over the next five to 10 years, as I suspect it will, we must start today to prepare consumers for that possibility." globeandmail.com