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Published: Tuesday, 11/11/2003

Forecast on natural gas costs improves

BY JON CHAVEZ
BLADE BUSINESS WRITER

Natural gas winter heating costs, which three months ago looked like they might be outrageous by Christmas, now appear to be reasonable and may even drop a bit if the winter is mild.

The forecast for prices is even milder than a month ago when Columbia Gas of Ohio lowered its consumer rates to 69 cents per 100 cubic feet from 72 cents it had charged this fall. The price is for November through January.

About the beginning of the year, customers likely will know the rates for the rest of the winter. Reasons the rates might increase are the weather and the economy, said Gina Thompson, a spokesman for Columbia Gas of Ohio.

But the economy - especially the manufacturing sector - doesn t look to be surging anytime soon, thus holding down demand for natural gas.

The index of leading U.S. economic indicators fell in September for the first time in six months, which supported forecasts that the economy will slow in the fourth quarter.

The weather, although unpredictable, looks good for now. Scientists at the National Oceanic and Atmospheric Administration said last week that the weather phenomenon known as El Nino looks as though it will return in a weak form this month and will last to just before the Christmas holidays.

As a result, it is likely that warmer-than-average conditions will persist.

Plus, natural gas supplies are in good shape for winter, Ms. Thompson said. The thing is, we just felt supply would be a much bigger issue than it is, she added.

Peggy Laramie, a spokesman for the American Gas Association in Washington, said the sudden reversal of fortune for natural gas customers is caused mainly by suppliers working aggressively to increase storage capacities, factories cutting back on use because of the economic slowdown, and the electric utility industry not using as much gas-fired electricity production as expected.

As a result, fears of tight supplies and a harsh winter have subsided, she said.

It isn t that more natural gas supplies have come onto the market,” she said. “It s that demand has shifted. But the fact that we re easing into a normal pattern for prices is tremendous for the consumer.



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