Electric Power Demand Will Drive Gas Consumption Growth After 2000

• Northeast gas consumption growth during the 90's was largely driven by consumption in the industrial sector including cogeneration, increasing by 4.9 percent per year from 1990 through 1997. Beyond 2000, the point of focus is expected to take a dramatic shift towards the electric generation sector, which excludes cogeneration in these demand estimates.
  
• While natural gas consumption is expected to ultimately grow in all sectors within the Northeast and the United States, the growth in consumption by electric generators is expected to far outpace the rest. While the total growth rate for natural gas consumption in the Northeast is expected to be close to that of the rest of the country, the growth in the electric generator sector is expected to be significantly greater in the Northeast, achieving a 7.6 versus a 4.5 percent average annual increase from 1997 through 2020. The explanation for this dramatic growth will be provided in later slides.
  
• While the Northeast growth in the electricity generation sector is outpacing the rest of the country, the other sectors are lagging behind, primarily because the population in the Northeast is anticipated to grow at a much lower rate than the U.S. average (0.3 compared to 0.8 percent per year).
  
• The patterns for natural gas consumption within the residential sector vary significantly across the three Census divisions of the Northeast, largely because of differences in the potential for switching from petroleum to natural gas. Currently natural gas dominates petroleum use in the Middle Atlantic and in the East North Central Census division, leaving little potential for switching to natural gas. However, in New England where oil furnaces currently dominate the market, EIA is forecasting a significant penetration of natural gas furnaces in new houses and to replace retiring oil furnaces. This is based on a life-cycle cost analysis and largely driven by a forecast of declining residential natural gas prices in the region. The cost of conversion to natural gas is included in our analysis when applicable; although retirement rates are scheduled and are not influenced by relative economics. In aggregate, total residential gas consumption for the 3 Census divisions remains relatively stable through 2020.
  
• Commercial natural gas consumption in the Northeast is projected to grow 0.4 percent per year from 1997 through 2020, compared to 0.7 percent in the United States. Relatively slow commercial floor space growth during this period, 0.3 percent per year, and efficiency improvements in natural gas-fired equipment are expected to curtail further growth in commercial natural gas use.
  
• Consumption growth in the industrial sector, including cogeneration, in the Northeast similarly lags behind the United States as a whole (Northeast–0.9 percent per year, United States–1.0 percent). New England and Middle Atlantic divisions have very little heavy industry, and relatively low annual projected growth in natural gas consumption, 0.5 and 0.8 percent respectively. Here, the largest growth rates are for the electronics industry (4.5 percent) and pharmaceuticals. These industries are not very energy intensive and they tend to consume relatively more electricity. The East North Central Division has more heavy industry and greater natural gas use, which is expected to grow faster (1.0 percent per year).

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