With natural-gas prices at their lowest level since mid-1992, it's not surprising to hear U.S. producers growling and groaning. Some are even curtailing production as they wait for better times. But executives in this business are accustomed to sudden reversals. "For 10 years running, you get encouraged, and then, for one reason or another, there's more gas than there is demand," gripes MESA Inc. Chairman T. Boone Pickens Jr.

Panic time? Not yet. Most analysts and producers expect the oversupply of natural gas--which is due in part to moderate summer weather--to prove fleeting. With demand rising, no one sees a return of the dreaded "gas bubble," or overhang of supply, that crushed prices until two years ago. "One of the reasons prices have moved so quickly is that we are very close to some sort of equilibrium in demand and supply," contends Gregory A. Dodd, vice-president for gas marketing at Mitchell Energy & Development Corp.

Still, near-term prospects are grim. After two years of rebounding gas prices, producers and investors were hoping for another gain in 1994. Now, with spot-gas prices at $1.40 or less per thousand cubic feet, they're hunkering down for lower earnings. Analyst David C. Bradshaw of PaineWebber Inc. expects gas prices to average about $1.85 to $1.90 for the year, vs. $2 last year, the industry's best showing since 1985. Lower natural-gas prices should drag down third-quarter earnings for independent producers by 7% on average, he figures.

Why are gas prices in such a steep slide? A relatively mild summer--and less need for air conditioning--depressed use by electric utilities. At the same time, several nuclear plants that were down last summer were operating this year, absorbing as much as 1.5% of the nation's gas demand. That may not seem like much. But, notes NatWest Securities Corp. analyst Christopher O. Eades, "this is a very tight market. Any changes on the margin have a very profound effect."

CANADIAN PIPELINE. Other factors, too, are forcing gas prices down: With plenty of cheap supplies around, storage operators rebuilt inventories early. The American Gas Assn. figures storage facilities are now about 90% full, two weeks ahead of last year's rate. Plus, Canada's weak dollar and a large pipeline expansion into California helped boost Canada's gas exports to the U.S. by about 12% through June, says Eades.

Producers are hoping for unseasonably cold weather. "If you get a mild winter, hang on to your hat," warns Pickens. Raymond Plank, chief executive of independent producer Apache Corp., says that if the weather stays warm and gas prices fail to rise above $2.10 by November and December, the company could cut its drilling budget for 1995. It will spend $265 million on drilling this year, and, prices allowing, hopes to boost that to more than $300 million next year.

Some analysts, though, expect producers to ride out the storm easily. After five years of restructuring, many have much lower debt and operating costs. "The industry has adapted to this kind of price environment," agrees Larry Foster, chief editor of Inside F.E.R.C., an industry newsletter. Maybe. But it doesn't have to like it.

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