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To: Bucky Katt who wrote (9851)	2/28/2003 8:46:34 AM
From: Bucky Katt	Respond to of 48461

All of a sudden, we have a natgas shortage and a growing crude shortage....This wasn't too hard to figure... Effects of Gas Shortage Rip Through Economy By RUSSELL GOLD and REBECCA SMITH Staff Reporters of THE WALL STREET JOURNAL Once thought plentiful, the U.S. is now facing a shortage of natural gas that could last for years, and the impact is just beginning to ripple through an already ailing economy. Cold weather and tight supplies this week caused natural-gas futures prices to soar 65% in one day. This triggered sharp jumps in spot-market electricity prices in some areas of the country where natural gas fuels power plants. Small-business and residential natural-gas customers may see higher bills soon if state regulators approve an increase in rates, but rising prices on the spot market are already taking a toll on some industrial users. Wheeling-Pittsburgh Steel Corp. is reducing or halting operations at three plants in Ohio because of spiking natural-gas prices. The company said it usually pays between $4 and $7 per million cubic feet, but spot prices have climbed as high as $28 per million cubic feet. Steel Dynamics Inc., a Fort Wayne, Ind., steelmaker now runs its electric arc furnaces at night and on weekends when electricity prices are lower. Dow Chemical Co., Midland, Mich., a big user of both electricity and gas-feed stocks, has begun raising prices on products because of higher energy costs. Precedent to Recessions "Strong energy prices weaken the economy, and it's likely to retard the recovery," says Stephen Brown, director of energy economics at the Dallas Federal Reserve Bank. "Nine of the 10 last recessions have been preceded by sharply higher energy prices." _______________________ Officials Say OPEC Can't Keep Lid on Rising Crude-Oil Prices By BHUSHAN BAHREE and THADDEUS HERRICK Staff Reporters of THE WALL STREET JOURNAL With U.S. crude-oil prices fast approaching $40 a barrel -- the highest since the start of the Persian Gulf War -- senior OPEC officials acknowledged that their increased production can no longer suppress the price rise, at least for now. The officials from the Organization of Petroleum Exporting Counties also said that only a dwindling amount of extra production capacity is left to meet world demand. A senior official from a key OPEC country said the group would almost certainly decide to supply even more oil, probably by removing all production restraints, when the group's ministers meet March 11 in Vienna. A decision to open the spigots wide could come even before then if prices continue to spike, he said. The recent price increases come on fears of another war against Iraq and low inventories aggravated by a shortfall in Venezuelan production due to a strike aimed at toppling President Hugo Chavez. A cold snap in North America and sharply rising natural-gas prices also have contributed to the run up in oil prices, now the highest since 1991. After hitting an intraday high of $39.99 a barrel, U.S. light crude for April delivery settled Thursday at $37.20 a barrel, down 50 cents, on the New York Mercantile Exchange. "At this time, the funds, traders and speculators on the Nymex are more powerful than OPEC," the senior official said. "Some things you can control, and some things you can't." The sharp rise in prices represents a serious threat to the sputtering U.S. and global economic recovery. Prices are rising for everything from jet fuel -- which is leading to higher air fares -- to gasoline -- already more than $2 a gallon in some U.S. markets -- and that is driving up the cost of doing business for many industries. Adam Sieminski, an analyst at Deutsche Bank, says that global gross domestic product declines by as much as 0.5% for every $10 rise in the price of a barrel of oil. "This is going to lay a huge egg on the economy," Mr. Sieminski said.