Quality Magazine

Natural Gas Prices Cut Profits 14%

May 19, 2003
The rising price of natural gas is not only causing individuals to do a double take at recent bills, but manufacturers are suffering as well. Manufacturers consume 26% of the natural gas used in the United States, and gas prices are 139% higher than they were last year, according to the National Association of Manufacturers (NAM).

"Our calculations indicate that between 1999 and 2000, the rising price of oil and gas cost our economy more than $115 billion, a full percentage point of gross domestic product," said Jerry Jasinowski, NAM president. He added that the "whopping" increase in energy costs has reduced manufacturers' profits by roughly 14%.

NAM surveyed 5,500 manufacturers and found that 90% of companies that depend on gas are passing on no more than 25% of their increase to customers. "Additionally, more than a one-fourth of large companies report that they have curtailed operations in response to natural gas price increases or unavailability, and 12% of all natural gas using firms have had their production processes interrupted due to the inability to obtain natural gas," said Jasinowski. "Unless supplies of natural gas increase, economic growth will continue to be dampened."