2001 Gas Balance: Recession Case
Recession will soften 2001 market, but basic problem unsolved.
Industrial demand problems
Possibly severe shrinkage
Failure to rebound even as prices decline
Gas demand for power still grows
Better economics vs. substitutes but lower peaking unit dispatch
Activity likely to tumble quickly if prices fall
Marginal projects cancelled
Cost-cutting mergers
Capital discipline and recent hedges viewed as smart
Misplaced belief in low prices sets up next cycle
Equity market neglect
Remote gas shelved
Majors resume exodus from US
Winners will be companies that can continue activity in preparation for upturn.
Price still above historical mean
Next cycle likely stronger and longer