Energy in the United States is more valuable than energy in the Middle East. We don't need a huge military buildup to produce natural gas in this country. Last year many gas producers competed with each other to sell a resource in short supply bqlow its replacement cost.
Supply-cost economics drive the market to the cheapest source. North American gas is the most attractive energy in the world. The consumers get the best value per dollar per Btu. The Monthly Energy Review of the Department of Energy indicates that the demand for U.S. natural gas is increasing at a rate of almost 4 percent a year, but it is possible that we are consuming about 5 percent more gas than last year, and consumption is accelerating. It doesn't come out in the US. government figures because there is so much gas being sold directly to the end users, gas that bypasses the interstate pipeline system. By the time the reports filter back to the Department of Energy, a long time has passed.
Industrial gas production has been picking up, and the difference between residual fuel oil prices and natural gas prices pushes very hard to increase consumption of natural gas. It is anticipated that the consumption of natural gas will increase for the foreseeable future, while the decline in drilling activity and gas well completions continue to reduce our proven reserves and deliverability. For it is also anticipated that the total consumption of natural gas in the United States will run about 17.6 trillion cubic feet, with production of about 16.6 trillion cubic feet. By 1989, the supply and demand for U.S. natural gas should be reasonably balanced. The market is a discounting proposition and will anticipate this situation.
HIGHER PRICES
Accordingly, during this winter of 1988, we saw some cold spells that increased the demand Malcolm R. Rudolph i s chief executive oficer of Derand Energy Group, an investment-bankingjirm in ArZington, Virginia.