Fuel for thought As in 2003, one of the major issues that our industry will continue to deal with in 2004 is the availability and cost of energy/fuel. This issue is not going to go away any time soon. One reason given by voters for the October recall of California Gov. Gray Davis was his purported mishandling of the state's energy crisis during 2000-2001. Just days before the recall election, California officials asked a federal court to require energy companies to refund consumers an additional $6 billion as a result of alleged inflated rates. In March the Federal Energy Regulatory Commission ordered several energy companies to refund $3.3 billion to the state's consumers. Companies, including Enron and Reliant Energy Services, which were cited for manipulating natural gas and electricity prices, claim they did nothing wrong. A report by the Public Policy Institute of California indicated that the state's energy crisis cost about $45 billion in higher electricity rates over two years. Considering that more than 20 states are seriously looking at deregulation, consumers can't help but be concerned about what may happen to rates and supplies. The major electrical blackout this summer in the North and parts of Canada impacted more than 50 million people. Could it be an omen of the near future? Industry and government analysts are already advising consumers to expect to pay more for energy this winter, whether it be natural gas, heating oil or gasoline. U.S. Energy Department officials reported that wholesale natural gas prices are expected to average about $5 per 1,000 cubic feet for all of 2003, about 70 percent above 2002. Federal officials said how much more consumers will be paying depends largely on the weather. Impact on business While heating fuel costs are a concern, natural gas supply prices and availability in the United States could have an even bigger impact on some industries. USA Today reported more companies could relocate outside the United States because of escalating natural gas prices. For many products, including paint, fertilizer and plastics, natural gas is an important component and the major production cost. Some companies have laid off employees, shut down plants or even filed for bankruptcy as a result of high natural gas prices. Other companies have felt the impact of higher natural gas prices through rising electricity costs. More electric-generating plants are burning natural gas, which is adding to the demand for this cleaner-burning fuel. Energy Department reported working natural gas in storage at the end of September was nearly 7 percent below the year-ago level. But officials are projecting natural gas production will increase 2.1 percent this year. Regardless, energy costs and availability will continue to be a major issue for growers. Send this article to a friend Enter your e-mail address: Enter your friend's e-mail address: Click the image below to send: © 2002 Branch-Smith Publishing