The year-end report notes that the 1991-92 heating season had lower average oil prices (retail home heating fuel) than the past two winters and prices remained relatively stable throughout the season. This year, the heating season average was $.87 per gallon, $1.05 for kerosene, and $1.33 for propane.

The natural gas industry has proposed an increase in the DOE gas R&D budget from about $100 million to about $250 million per year for each of the next 10 years. The proposal includes four programs: natural gas supplies, fuel cells, natural gas vehicles and stationary combustion systems. This paper is a qualitative assessment of the gas industry proposal and recommends a natural gas R&D strategy for the DOE. The methodology is a conceptual framework based on an analysis of market failures and the energy policy objectives of the DOE`s (1991) National Energy Strategy. This framework would assist the DOE in constructing an R&D portfolio that achieves energy policy objectives. The natural gas supply program is recommended to the extent that it contributes to energy price stability. Stationary combustion programs are supported on grounds of economic efficiency and environmental quality. The fuel cell program is supported on grounds of environmental quality. The natural gas vehicle program may potentially contribute to environmental quality and energy price stability. The R&D programs in natural gas vehicles and in fuel cells should be complemented with policies that encourage the commercialization and use of the technology, not merely its development.