Energy crisis could unplug growth

Rising prices and dwindling resources are stirring alarms among energy experts, who contend Utah's historically low energy prices may soon be a thing of the past, threatening future economic growth.

Already, mounting electricity prices coupled with skyrocketing natural gas and oil costs are putting pressure not only on Utah consumers but also on Utah businesses and industries that often cannot pass higher energy costs on to customers. No relief is in sight, with steeper prices projected over the next five to seven years, according to the Utah Association of Energy Users, a Salt Lake-based trade organization whose 40 members spend more than $250 million annually on natural gas and electricity.

In fact, Paul Barber, a senior consultant for the association, said Utah consumers, businesses and industry in 2003 spent $2.06 billion in overall energy costs, a 25 percent increase compared to $1.65 billion spent in 1999.

Those increases do not account for recent spikes in natural gas and electricity. Last week, Salt Lake-based Questar Gas Co. said it wanted to raise natural gas prices 14.4 percent, the third-largest rate increase in 17 years. That request follows a 10.4 percent hike in natural gas rates last fall.

Since May 2000, PacifiCorp — which operates in Utah as Utah Power and supplies electricity to 75 percent of Utah residents — has raised rates by an average of more than 25 percent. That is in contrast to the 1990s, when rates fell by more than 30 percent.

"In the past, energy has been so abundant people haven't focused on it," Barber said. "We're now getting to a point where we're going to have to start worrying about it again. Utah needs a comprehensive energy strategy, as does the United States."

Historically, Utah has been fortunate, Barber said, as the state ranked near the top 10 of all states in terms of oil, natural gas and coal production.

"It helped shield Utah from fluctuations in supply from overseas," Barber said, "but more importantly it provided a lot of good jobs."

Yet those vast resources may be showing signs of diminishing.

For instance, Utah coal reserves — the fuel supplying 95 percent of Utah's electricity — once were thought to be inexhaustible. However, Barber said Utah faces a potential coal crisis, with only 14 to 19 years of coal supplies remaining.

Of the state's roughly 14 billion tons of coal reserves, 5 billion tons are off limits, located in the Kaiparowits Plateau. That leaves the state with 9 billion tons, which Barber said still represents a tremendous amount of coal, but nearly two-thirds of it cannot be mined with an underground long-wall machine, making it uneconomical to recover.