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- (EIRNS) - The natural gas shock is now hitting everywhere,
from localities across the United States and Mexico, to India, on the other
side of the world. In some places gas prices have jumped more than 300%
in just the last six months.
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- But with natural gas (and related products-- propane,
etc.), if you know anything at all about the geographic patterns of production,
pipelines, trade and distribution, you can't pin false blame on Arab sheiks--as
the media and government officials are now trying to do with oil. Almost
all natural gas consumed in the United States is produced in North America.
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- The essential points about the natural gas crisis, which
parallel the oil price crisis, are:
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- 1) Speculation on deregulated "markets" is
driving up the prices, from the "spot" market, to futures and
derivatives of all kinds. The graph shows the soaring price on the spot
market (for trading in short-term contracts); it's called the "Henry
Hub" reference price, for a gas pipeline terminus in Louisiana, one
of the top three gas-producing states, along with Texas and Oklahoma.
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- Among the biggest holders of derivatives (speculative
futures contracts) are Goldman Sachs, Duke Power, and Enron, many of whose
representatives testified to Congress Sept. 28 that they will brook no
intervention in their "free market" of energy prices (see article,
p. 2).
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- 2) The big players in natural gas futures, and energy
derivatives gambling of all kinds (oil, electricity, etc.), are the same
giant companies that have come to dominate the actual physical supply lines
of natural gas, from source, to transmission, to distribution.
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- This takeover process is part of the across-the-board
commodities grab that has taken place during the 1990s, to the point of
cartel control over all kinds of essentials, from food and agriculture
products, to strategic minerals and industrial inputs.
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- - Blame the Bush/Gore Backers -
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- The political/financial interests involved are best described
as "BAC"--British American Commonwealth--from the make-up of
the funding, boards of directors, and corporate policies. In turn, these
circles interconnect with {both the Bush and Gore} candidacies.
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- The largest donor by far to the Bush campaigns is Texas-based
Enron, formed in 1985 as a merger of two natural gas companies, contributing
over $550,000 to Bush family campaigns. All the companies are heavily behind
the Bush and Gore "Clean Air" environmentalist campaign pushing
natural gas.
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- The top four integrated natural gas companies (equivalent
to the oil mega-majors Mobil-Exxon, BP-Amoco-Arco, etc.) in the United
States, according to Standard and Poor's ratings, are Columbia Energy Group,
Consolidated Natural Gas, Enron, and Questar. Likewise, the pipelines transporting
the gas on this continent are in the hands of a select few companies: Coastal
Corp., El Paso Energy Corp./DE, Sonat Inc., TransCanada Pipelines, and
Williams Cos. Inc.
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- The graph on U.S. natural gas shows that production and
consumption rose in tandem, up until the 1970s. Then began the deregulation
process, and other instigated destabilizations of economic activity (floating
currency exchange; Federal Reserve double-digit interest rates; deliberately
provoked oil "shocks," Mideast strife). In 1978 the U.S. Natural
Gas Policy Act was passed, beginning the deregulation of well-head prices
(removing parity and stability), forcing out many independents. In 1990,
President George Bush signed amendments to the Clean Air Act, blatantly
in service of Texas energy and financial interests. (For particulars on
the "Big Energy" interests behind Gore and Bush, see p. 8).
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- In recent years, the BAC cartel moved to bring online
more imports of natural gas from Canada, under their control. This is shown
on the graph. As U.S. consumption falls below production, the gap is made
up almost entirely from Canada.
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- In November, a new 1,857-mile pipeline will open, from
British Columbia to Chicago, a key part of the new geostrategic control
of resources.
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- What is required is a reassertion of national interest
by governments, and intervention into the worsening crisis, by stabilizing
supplies and prices, and breaking up the commodities lockup.
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- - Crisis: United States -
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- Over 25% of the energy used in the United States comes
from natural gas, and some 40% of that goes to industrial customers, including
factories and electric power plants. The rest is for commercial and residential
customers, including schools and hospitals.
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- The Department of Energy is estimating that natural gas
prices this winter could rise to $8.59 per 1,000 cubic feet, which is more
than $2 higher than a year ago, and about four times what it was two years
ago. In the U.S. Midwest, where homes, industry, agriculture, and public
facilities rely most heavily on natural gas, institutions are gearing up
plans to try to deal with rapidly escalating natural gas prices, driven
by the speculative frenzy in energy markets.
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- As an example of what localities are facing, it is reported
that MidAmerican Energy has notified the Des Moines, Iowa school district
that natural gas prices could increase 48% this winter. The school system's
chief operations officer commented that they will have no choice but to
pay this highway robbery, because "heating our schools is not optional."
But since they have a pre-set budget, they face dipping into reserves,
cutting programs, or eliminating jobs.
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- Hospitals and all other kinds of institutions are in
the same situation. On Sept. 20, state governors met in Cleveland, Ohio,
for a Natural Gas Summit.
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- - Crisis: Mexico -
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- In Mexico, the natural gas price hyperinflation is wreaking
havoc. In the leading industrial state of Nuevo Leon, 500 companies may
shut down. The 150% increase in the natural gas price this year has caused
the Hylsa steel complex to suspend its mining activities in the states
of Colima, Jalisco, and Michoacan, affecting the Cerro Nahuatl, El Encino,
and Aquilas mines which supply it with ore.
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- In Monterrey, three reduction plants will also shut down,
while the Puebla plant is operating at 50% capacity. More than 1,200 workers
will be affected directly, and another 6,000 indirectly. The Canasintra
industry association has warned that 250,000 workers could be laid off
in the glass, ceramic, and steel industries this winter, because of high
gas prices. _____
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- This article appears in New Federalist newsweekly, Oct.
9. A free copy of that issue, PLUS the Sept. 29 Executive Intelligence
Review, which includes a dynamite 20 pages on "the third and final
energy hoax," how the Federal Reserve and the BLS lie about consumer
price inflation, and related matters, will be sent free to anyone who calls
1-888-EIR-3258 and says they "saw it on Rense.com."
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