NCPA - National Center for Policy Analysis

Utilities Bet Heavily On Natural Gas

July 25, 2000

Energy experts say that without realizing it, the U.S. is making a major bet on future natural gas supplies.

  • Currently proposed new electric power generating capacity is equal to one-third of existing capacity.
  • Just 15 percent of our current electric generating capacity is fired by natural gas.
  • But an extraordinary 95 percent of the proposed new capacity is gas-fired.
  • As if that weren't troubling enough, energy experts say that gas production capability in the U.S. has fallen nearly 7 percent just since 1997.

Natural gas prices have doubled since the first of the year -- which is very significant for a commodity that supplies one-quarter of our total energy needs.

Experts say the challenge to the industry is to reverse the decline in supply and get on a path to meet rapidly accelerating demand from the power industry. They estimate that this will require an investment of more than $500 billion over the next decade -- nearly double the level of the 1990s.

Source: Daniel Yergin (Cambridge Energy Research Associates) and Thomas Robinson, "A Quiet Energy Crisis," Washington Post, July 21, 2000.


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