A WINTER SUPPLY CRISIS SCENARIO…..
FICTION OR SOON-TO-BE FACT

Editor's Note: The following "prophetic" story is exerted from an article written in August 2000 by Keith Millheim, University of Oklahoma, and published in the Journal of PetroleumTechnology.

     It is January 8, 2001. The weather-broadcasting channel has been predicting the southeastern movement of a brutal arctic cold front. Already, Calgary has registered -20F with no relief in sight.  Gordon is awakened by his wife. "Something is wrong. I'm freezing." Living in Minneapolis, cold weather is the norm.  You bundle up to go outside, and you keepthe furnace set at 70F to keep the inside comfortable.  Gordon looks at thethermometer. It reads 58F.  He notices the blowers are off. After playing with the thermostat, with no success, he ventures to the basement to check the furnace.  He pulls off the faceplate and prostrates himself to view the pilot light.  As expected, it's off.  He feels better already.  Just relight the pilot and two hours later Linda and the kids will be warm as usual.  Twenty matches later, Gordon is worried.  The furnace needs servicing.  He rings an all-nightrepair number.  It's busy.  Three hours later, huddled with Linda and his children in front of the kitchen oven, he gets through to the furnace repair.  The serviceman informs him that there is nothing he can do.  Before the serviceman hangs up, he says: "Be glad you've got electricity Mister, there are some places without gas and power."  Click!

     CNN confirms the man's last statement. All over the North there are places without ample natural gas supplies. And, to make things worse, because of lack of natural gas some utilities are forced to shut down their generators.  The grid  can't compensate and various parts of cities lose power.

    Day two.   The arctic front has stalled, covering all of the U.S. as far south as Miami (32F). CNN's coverage shows scene after scene of people trying to cope.  Within twenty-four hours, all the available firewood, nationwide, is bought.  Chainsaw sales soar.  Because people without gas are using electric heaters and keeping their electric ovens on, the grids are being taxed to their limit.

     Day three.  The President calls an emergency meeting with all oil company executives and asks them to open all gas production to maximum.  He also asks Canada to increase its export as much as possible.

    Day five, the temperatures warm slightly. Slowly, the grid stabilizes and the "gas outs" disappear.  By day seven, everything seems to be okay. At least that is what the USA Today headline reports.  But in the Oval Office where the Secretary of Energy is briefing the President and President-Elect, the story isn't so good.

     "Mr. President," said the Secretary, "We have a major problem. We cannot take another arctic front like the last one.  All the gas we had in reserve, in storage, was totally depleted over the last week.  We have no added capacity."

     "What about Canada?" asked the  President.

     "No help there, sir. They are at maximum production."

     "And, what about our own fields?  I was led to believe we had ample capacity if everyone opened up their wells."

     "I'm afraid we are at the maximum, sir."  The Secretary swallowed, "And, that's not the worst of it."

     "How so?" asks the  President-  Elect.

     "As you know, Texas and Louisiana consume most of their production with a significant amount of natural gas going into petrochemicals.  If we need more gas, that is the most expendable."

     The  President-Elect sat straight up in his chair, "Impossible. You know what that will do, Mr. Secretary?"

    He nodded. "If we force gas sales out of Texas and Louisiana, it means the petrochemicals industry will go into a tailspin. I know the ramifications. But what can we do, have another week like we just had? We must consider the people, first."

     The  President-Elect hunched back in his chair and stared at the retiring president.  "We have a mess.  Have you seen the natural gas futures? U.S. $7.50 per Mcf.  Can you imagine when this trickles down to the consumers and they see their gas and electricity bills, double and triple to this time last year?  And you can forget holding inflation.  We are so dependent on petrochemicals, once there is a major shortfall and we have to import, the price of everything from foods to clothing will go out of sight."

     "We have another possibility," interjected the  Secretary of Energy.  "We can go back to more coal production and more oil imports.  Maybe we can get the utilities to use less natural gas for the next few years while we get our natural gas deliverability and storage capacities increased."

     Silent until now, the President-Elect's transition team energy advisor speaks,  "With due respect, gentlemen, that is a non-option.  We cannot do anything to increase our carbon emissions.  For the last decade, we have promoted reducing carbon emissions.  And now that we face an energy crisis of our own making, you want to say time out, we need to violate our own policies until we get things straight. I don't think the international community will enjoy that.  There is no easy way to escape this situation."

    The secretary of energy slumped in his chair. "How did this happen?"

    Author Keith Millheim commented, 'Fiction? Maybe or maybe not. The preceding scenario could just happen."

     Because the country has had no comprehensive energy policy, this scenario is sadly a very real possibility. Henry Hub spot gas prices hit $10/mmbtu this past December.  California is in the midst an electric power crisis as its public utilities are rapidly going bankrupt with the regulatory prohibition against passing on to customers their sky-rocketing costs for purchased gas and electricity. This winter looks to be brutal. Let's hope and pray that the Bush Administration will implement a balanced energy policy that addresses the long-term supply issues.