Page 1 of 21

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC  20549
                                   FORM 10-Q


                   QUARTERLY REPORT UNDER SECTION 13 or 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


For the Quarter Ended March 31, 2001          Commission File Number 000-22211


                            SOUTH JERSEY GAS COMPANY
             (Exact name of registrant as specified in its charter)


            New Jersey                              21-0398330
      (State of incorporation)          (IRS employer identification no.)

                    1 South Jersey Plaza, Folsom, NJ  08037
          (Address of principal executive offices, including zip code)

                                 (609) 561-9000
              (Registrant's telephone number, including area code)


Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                             Yes  [X]      No  [  ]


As of May 4, 2001 there were 2,339,139 shares of the registrant's common stock
outstanding.  All common shares are owned by South Jersey Industries, Inc., the
parent company of South Jersey Gas Company.


                                   - Cover -



                        PART I -- FINANCIAL INFORMATION



            Item 1.  Financial Statements -- See Pages 3 through 11





                                     SJG-2


<TABLE>
                    SOUTH JERSEY GAS COMPANY AND SUBSIDIARY

            CONDENSED STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)
                    (In Thousands Except for Per Share Data)

<CAPTION>
                                                         Three Months Ended
                                                              March 31,
                                                     --------------------------
                                                         2001          2000
                                                     ------------  ------------
<S>                                                  <C>           <C>
Operating Revenues:
   Utility                                           $   218,815   $   146,627
   Other                                                     641           375
                                                     ------------  ------------
      Total Operating Revenues                           219,456       147,002
                                                     ------------  ------------
Operating Expenses:
   Gas Purchased for Resale                              161,340        88,818
   Utility Operations                                      9,519         9,811
   Other Operations                                          354           348
   Maintenance                                             2,885         2,770
   Depreciation                                            5,183         4,920
   Income Taxes                                           12,295        12,608
   Energy and Other Taxes                                  4,416         4,335
                                                     ------------  ------------
      Total Operating Expenses                           195,992       123,610
                                                     ------------  ------------
Operating Income                                          23,464        23,392

Interest Charges:
   Long-Term Debt                                          4,232         3,833
   Short-Term Debt and Other                               1,334         1,194
                                                     ------------  ------------
      Total Interest Charges                               5,566         5,027

Income Before Preferred Dividend Requirements             17,898        18,365

Preferred Stock Dividend Requirements                         36            40
Preferred Securities Dividend Requirements                   730           731
                                                     ------------  ------------
Net Income Applicable to Common Stock                $    17,132   $    17,594
                                                     ============  ============
Average Shares of Common Stock Outstanding                 2,339         2,339
                                                     ============  ============
Earnings Per Common Share                            $      7.32   $      7.52
                                                     ============  ============
Dividends Declared Per Common Share                  $      1.87   $      1.80
                                                     ============  ============

<FN>
The accompanying footnotes are an integral part of the financial statements.
</FN>
</TABLE>

                                     SJG-3


<TABLE>
                              SOUTH JERSEY GAS COMPANY AND SUBSIDIARY

                               CONDENSED CONSOLIDATED BALANCE SHEETS
                                          (In Thousands)

<CAPTION>
                                                              (Unaudited)
                                                               March 31,              December 31,
                                                      ---------------------------     ------------
                                                          2001           2000             2000
                                                      ------------   ------------     ------------
<S>                                                   <C>            <C>              <C>
Assets

Property, Plant and Equipment:
   Utility Plant, at original cost                    $   771,546    $   729,901      $   763,860
     Accumulated Depreciation                            (211,993)      (195,958)        (208,292)
   Gas Plant Acquisition Adjustment - Net                   1,683          1,757            1,701
                                                      ------------   ------------     ------------
          Property, Plant and Equipment - Net             561,236        535,700          557,269
                                                      ------------   ------------     ------------
Available-for-Sale Securities                               2,483          1,701            2,494
                                                      ------------   ------------     ------------
Current Assets:
   Cash and Cash Equivalents                                4,414            335            4,715
   Accounts Receivable                                     93,824         61,552           67,803
   Unbilled Revenues                                       34,206         15,557           43,803
   Provision for Uncollectibles                            (1,743)          (860)          (1,754)
   Natural Gas in Storage, average cost                     7,263         10,182           31,769
   Materials and Supplies, average cost                     3,894          3,952            4,037
   Prepaid Taxes                                                -              -            3,960
   Prepayments and Other Current Assets                     2,374          2,254            2,640
                                                      ------------   ------------     ------------
          Total Current Assets                            144,232         92,972          156,973
                                                      ------------   ------------     ------------
Accounts Receivable - Merchandise                             225            599              277
                                                      ------------   ------------     ------------
Regulatory and Other Non-Current Assets:
   Environmental Remediation Costs:
     Expended - Net                                         9,853         17,840           18,474
     Liability for Future Expenditures                     51,029         51,029           51,029
   Gross Receipts and Franchise Taxes                       2,587          3,030            2,698
   Income Taxes - Flowthrough Depreciation                 10,308         11,286           10,553
   Deferred Fuel Cost - Net                                30,949          6,517           28,810
   Deferred Postretirement Benefit Costs                    4,441          4,820            4,536
   Other                                                    8,619          6,734            8,970
                                                      ------------   ------------     ------------
          Total Regulatory and Other Non-Current
           Assets                                         117,786        101,256          125,070
                                                      ------------   ------------     ------------
               Total Assets                           $   825,962    $   732,228      $   842,083
                                                      ============   ============     ============

<FN>
The accompanying footnotes are an integral part of the financial statements.
</FN>
</TABLE>

                                               SJG-4


<TABLE>
                              SOUTH JERSEY GAS COMPANY AND SUBSIDIARY

                               CONDENSED CONSOLIDATED BALANCE SHEETS
                                          (In Thousands)

<CAPTION>
                                                              (Unaudited)
                                                               March 31,              December 31,
                                                      ---------------------------     ------------
                                                          2001           2000             2000
                                                      ------------   ------------     ------------
<S>                                                   <C>            <C>              <C>
Capitalization and Liabilities

Common Equity:
   Common Stock, Par Value $2.50 per share:
      Authorized - 4,000,000 shares
      Outstanding - 2,339,139 shares                  $     5,848    $     5,848      $     5,848
   Other Paid-In Capital and Premium on
    Common Stock                                          125,817        117,817          125,817
   Retained Earnings                                       78,193         71,851           65,436
                                                      ------------   ------------     ------------
          Total Common Equity                             209,858        195,516          197,101
                                                      ------------   ------------     ------------
Preferred Stock and Securities:
   Redeemable Cumulative Preferred - Par Value
    $100 per share,
   Authorized 43,104, 45,504, and 43,104 shares,
    respectively
   Outstanding:
      Series A, 4.7% - 300, 1,200 and 300 shares               30            120               30
      Series B, 8% - 17,742, 19,242 and 17,742
       shares                                               1,774          1,924            1,774
   Company-Guaranteed Mandatorily Redeemable
    Preferred Securities of Subsidiary Trust
    Par Value $25 per share,  1,400,000 shares
    Authorized and Outstanding                             35,000         35,000           35,000
                                                      ------------   ------------     ------------
          Total Preferred Stock and Securities             36,804         37,044           36,804
                                                      ------------   ------------     ------------
Long-Term Debt                                            199,793        178,373          204,981
                                                      ------------   ------------     ------------
          Total Capitalization                            446,455        410,933          438,886
                                                      ------------   ------------     ------------
Current Liabilities:
   Notes Payable                                           92,500         82,000          113,900
   Current Maturities of Long-Term Debt                    11,876         11,876           11,876
   Accounts Payable                                        56,350         28,739           75,103
   Customer Deposits                                        5,455          5,462            5,366
   Environmental Remediation Costs                         15,872         12,534           15,872
   Taxes Accrued                                           14,494         15,729              442
   Interest Accrued and Other Current Liabilities          11,520          7,955           12,796
                                                      ------------   ------------     ------------
          Total Current Liabilities                       208,067        164,295          235,355
                                                      ------------   ------------     ------------
Deferred Credits and Other Non-Current
 Liabilities:
   Deferred Income Taxes - Net                            112,110         94,467          107,947
   Environmental Remediation Costs                         35,157         38,495           35,157
   Pension and Other Postretirement Benefits               12,705         12,705           12,314
   Investment Tax Credits                                   4,427          4,757            4,513
   Other                                                    7,041          6,576            7,911
                                                      ------------   ------------     ------------
            Total Deferred Credits and Other
             Non-Current Liabilities                      171,440        157,000          167,842
                                                      ------------   ------------     ------------
Commitments and Contingencies (Note 5)

               Total Capitalization and
                Liabilities                           $   825,962    $   732,228      $   842,083
                                                      ============   ============     ============

<FN>
The accompanying footnotes are an integral part of the financial statements.
</FN>
</TABLE>

                                     SJG-5


<TABLE>
                       SOUTH JERSEY GAS COMPANY AND SUBSIDIARY

                   CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
                                    (In Thousands)

<CAPTION>
                                                              Three Months Ended
                                                                   March 31,
                                                          ---------------------------
                                                              2001           2000
                                                          ------------   ------------
<S>                                                       <C>            <C>
Cash Flows from Operating Activities:
  Net Income Applicable to Common Stock                   $    17,132    $    17,594

  Adjustments to Reconcile Net Income to Cash Flows
   Provided by Operating Activities:
    Depreciation and Amortization                               5,769          5,829
    Provision for Losses on Accounts Receivable                   519             72
    Revenues and Fuel Costs Deferred - Net                     (2,139)         6,657
    Deferred and Non-Current Income Taxes and
     Credits - Net                                              4,277          1,029
    Environmental Remediation Costs - Net                       8,621          7,862
    Changes in:
      Accounts Receivable                                     (16,954)       (18,893)
      Inventories                                              24,649         16,791
      Prepayments and Other Current Assets                        266            207
      Prepaid and Accrued Taxes - Net                          18,012         19,164
      Accounts Payable and Other Accrued Liabilities          (19,940)        (8,474)
    Other - Net                                                  (164)         1,028
                                                          ------------   ------------
        Net Cash Provided by Operating Activities              40,048         48,866
                                                          ------------   ------------
Cash Flows from Investing Activities:
  Capital Expenditures, Cost of Removal and Salvage            (9,386)        (9,937)
                                                          ------------   ------------
        Net Cash Used in Investing Activities                  (9,386)        (9,937)
                                                          ------------   ------------
Cash Flows from Financing Activities:
  Net Repayments of Lines of Credit                           (21,400)       (36,900)
  Principal Repayments of Long-Term Debt                       (5,188)        (2,188)
  Dividends on Common Stock                                    (4,375)        (4,200)
                                                          ------------   ------------
        Net Cash Used in Financing Activities                 (30,963)       (43,288)
                                                          ------------   ------------
Net Decrease in Cash and Cash Equivalents                        (301)        (4,359)
Cash and Cash Equivalents at Beginning of Period                4,715          4,694
                                                          ------------   ------------
Cash and Cash Equivalents at End of Period                $     4,414    $       335
                                                          ============   ============

<FN>
The accompanying footnotes are an integral part of the financial statements.
</FN>
</TABLE>

                                     SJG-6


        Notes to Condensed Consolidated Financial Statements (Unaudited)


Note 1.  Significant Accounting Practices:

     Consolidation - The consolidated financial statements include the accounts
of South Jersey Gas Company (SJG) and its wholly-owned statutory trust
subsidiary, SJG Capital Trust.  All significant intercompany accounts and
transactions were eliminated.  We reclassified some previously reported amounts
to conform with current year classifications. In our opinion, the condensed
consolidated financial statements reflect all adjustments needed to fairly
present SJG's financial position and operating results at the dates and for the
periods presented.  Our businesses are subject to seasonal fluctuations and,
accordingly, this interim financial information should not be the basis for
estimating the full year's operating results.

     South Jersey Industries, Inc. (SJI) owns all of the outstanding common
stock of SJG.

     Estimates and Assumptions - Our financial statements are prepared to
conform with generally accepted accounting principles.  Management makes
estimates and assumptions that affect the amounts reported in the financial
statements and related disclosures. Therefore, actual results could differ from
those estimates.

     New Accounting Pronouncements - In June 1998, the Financial Accounting
Standards Board (FASB) issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities," and in June 2000, FASB issued Statement
No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities."  Both were effective for our fiscal year beginning January 2001.
These statements establish accounting and reporting standards for derivative
instruments, including those embedded in other contracts, and for hedging
activities.  It requires recognizing derivatives as assets or liabilities at
fair value on the balance sheet.  SJG has identified financial instruments that
qualify as derivatives.  Management believes, based on its interpretation of
guidance issued, that the derivative contracts qualify for the normal purchases
and normal sales exception and, therefore, no additional disclosure is
required.  Subsequent guidance from FASB or the Derivative Implementation Group
could affect the accounting for such transactions later in 2001 and beyond.

                                     SJG-7


Note 2.  Income Taxes:

     The significant components of federal and state income taxes reflected in
the condensed consolidated statements of income are as follows (in thousands):

                                             Three Months Ended
                                                  March 31,
                                             ------------------
                                               2001       2000
                                             --------   --------
          Current:
            Federal                          $ 5,821    $ 8,689
            State                              2,197      2,891
                                             -------    -------
                Total Current                  8,018     11,580

          Deferred:
            Federal                            3,580        984
            State                                784        136
                                             -------    -------
                Total Deferred                 4,364      1,120

          Investment Tax Credit                  (87)       (92)
                                             -------    -------
                Net Income Taxes             $12,295    $12,608
                                             =======    =======


     As of March 31, 2001 and 2000, income taxes due to SJI were approximately
$6.0 and $8.1 million, respectively.

Note 3.  Regulatory Actions:

     In January 1997, the New Jersey Board of Public Utilities (BPU) granted
SJG a total rate increase of $10.3 million.  The $6.0 million base rate portion
of the increase was based on a 9.62% rate of return on rate base, which
included an 11.25% return on common equity.  Additionally, SJG's threshold for
sharing pre-tax margins generated by interruptible and off-system sales and
transportation (Sharing Formula) increased from $4.0 million to $5.0 million.
With the completion of major construction projects, this $5.0 million threshold
increased to $7.8 million.  SJG keeps 100% of pre-tax margins up to the
threshold level and 20% of margins above that level.  In October 1998, the BPU
approved a revision to the Sharing Formula as part of an agreement to modify
SJG's Temperature Adjustment Clause (TAC).  The revision credits the first
$750,000 above the current threshold level to the Levelized Gas Adjustment
Clause (LGAC) customers.  Thereafter, SJG keeps 20% of the pre-tax margins as
it has historically.

     In August 1998, SJG filed with the BPU to recover increased remediation
costs expended from August 1995 through July 1998.  In September 1999, the BPU
approved the requested annual recovery level of $6.5 million.  This represents
an annual increase of approximately $4.5 million over the recovery previously

                                     SJG-8


included in rates.  In July 1999, SJG filed its annual Remediation Adjustment
Clause (RAC) with the BPU requesting recovery of carrying costs on unrecovered
remediation costs and proposed no change in the current RAC rate for the next 3
years.  In January 2000, the BPU approved the recovery of carrying costs on
unrecovered remediation costs and SJG's proposal to keep its current RAC rate
in effect through October 2002.

     Effective January 10, 2000, the BPU approved full unbundling of SJG's
system.  This allows all natural gas consumers to select their natural gas
supplier.  As of March 31, 2001, 33,156 of SJG's residential customers were
purchasing their gas commodity from someone other than SJG.  The bills of those
using a gas supplier other than SJG are reduced for cost of gas charges and
applicable taxes.  The resulting decrease in revenues is offset by a
corresponding decrease in gas costs and taxes under SJG's BPU-approved fuel
clause.  SJG's net income and financial condition are not affected as a result
of the unbundling.

     In addition to allowing all customers to select their own supplier, the
unbundling settlement also created an incentive to customers to select a
supplier, other than SJG, in the form of a Market Development Credit (MDC).
This credit is being provided to customers over a two-year period beginning
January 2000, and will approximate $2.5 million plus carrying costs through
December 2001.  This credit was provided for on SJG's books as a Deferred
Credit.  Therefore, the impact of the MDC will not materially impact future
periods.

     Also approved was the recovery of carrying costs on the RAC, as previously
discussed, and a modification to SJG's LGAC.  Under-recovered gas costs of
$11.9 million as of October 31, 1999, and carrying costs thereon, are being
recovered over a three-year period beginning January 2000.

     In August 2000, SJG filed its annual LGAC and TAC for 2000-2001.  The
filing requested a $35.0 million increase to its LGAC.  However, due to
unprecedented natural gas price run-ups, SJG filed for an additional increase
in October 2000.

     On November 16, 2000, SJG received approval to increase its LGAC. The
impact of this increase will be approximately 19.0% to a typical residential
heating customer. The BPU also approved the creation of a flexible pricing
mechanism, allowing for five additional 2.0% increases effective for December
2000 and January, February, March and April of 2001.  In March 2001, the BPU
approved additional LGAC rate increases for SJG using a flexible pricing
mechanism.  Additional rate increases of 2% in May , June and July 2001 were
approved.  In addition, the ruling permits SJG to recover unrecovered gas costs
as of October 31, 2001 with interest at 5.5% over a three-year period,
beginning December 1, 2001.  Recoverable interest costs will begin accruing on
April 1, 2001.

                                     SJG-9


Note 4.  Common Equity:

     Restrictions exist under various loan agreements regarding the amount of
cash dividends or other distributions that we may pay on our common stock.
SJG's retained earnings, which is free of these restrictions, was approximately
$76.4 million as of March 31, 2001.

     SJG received an equity infusion of $8 million from SJI during 2000.
Contributions of capital are credited to Other Paid-In Capital and Premium on
Common Stock.  Future equity contributions will occur on an as needed basis.

Note 5.  Commitments and Contingencies:

     Construction and Environmental Commitments - SJG's estimated cost of
construction and environmental remediation programs for 2001 totals $45.0
million.  Commitments were made regarding these programs.

     Pending Litigation - SJG is subject to claims arising in the ordinary
course of business and other legal proceedings.  We set up reserves when these
claims become apparent.  We also maintain insurance and record probable
insurance recoveries relating to outstanding claims.

     Environmental Remediation Costs - SJG incurred and recorded costs for
environmental clean up of sites where SJG or its predecessors operated gas
manufacturing plants.  SJG stopped manufacturing gas in the 1950s.

     SJG has successfully entered into settlements with all of its historic
comprehensive general liability carriers regarding the environmental
remediation expenditures at our sites.  In addition, we have purchased a
Cleanup Cost Cap Insurance Policy which limits the amount of remediation
expenditures that we will be required to make at eleven of our sites.  This
Policy will be in force for a 25-year period at ten sites and for a 30-year
period at one site.  The following future cost estimates have not been reduced
by any insurance recoveries from settlements or the Cleanup Cost Cap Insurance
Policy.

     Since the early 1980s, SJG accrued environmental remediation costs of
$122.3 million, of which $71.3 million was spent as of March 31, 2001.  With
the assistance of an outside consulting firm, we estimate that future costs to
clean up SJG's sites will range from $51.0 million to $148.5 million.  We
recorded the lower end of this range as a liability.  It is reflected on the
2001 condensed consolidated balance sheet under the captions Current
Liabilities and Deferred Credits and Other Non-Current Liabilities.  SJG did
not adjust the accrued liability for future insurance recoveries, which we were
successful in pursuing.  We used these proceeds to offset related legal fees
and to reduce the balance of deferred environmental remediation costs.
Recorded amounts include estimated costs based on projected investigation and
remediation work plans using existing technologies.  Actual costs could differ

                                     SJG-10


from the estimates due to the long-term nature of the projects, changing
technology, government regulations and site-specific requirements.

     SJG has two regulatory assets associated with environmental cost.  The
first asset is titled Environmental Remediation Cost: Expended - Net.  These
expenditures represent what was actually spent to clean up former gas
manufacturing plant sites. These costs meet the requirements of FASB No. 71,
"Accounting for the Effects of Certain Types of Regulation."  The BPU allows
SJG to recover expenditures through the RAC.  SJG's current recovery level
includes remediation costs expended through July 1998 and petitions to recover
costs through July 2000 are pending.

     The other asset titled Environmental Remediation Cost: Liability for
Future Expenditures relates to estimated future expenditures determined under
the guidance of FASB No. 5, "Accounting for Contingencies."  This amount, which
relates to former manufactured gas plant sites, was recorded as a deferred
debit with the corresponding amount reflected on the condensed consolidated
balance sheet under the captions Current Liabilities and Deferred Credits and
Other Non-Current Liabilities.  The deferred debit is a regulatory asset under
FASB No. 71.  The BPU's intent, evidenced by current practice, is to allow SJG
to recover the deferred costs after they are spent.

     SJG files with the BPU to recover these costs in rates through its RAC.
The BPU has consistently allowed the full recovery over 7-year periods, and SJG
believes this will continue.  As of March 31, 2001, SJG's unamortized
remediation costs of $9.9 million are reflected on the condensed consolidated
balance sheet under the caption Regulatory and Other Non-Current Assets.  Since
implementing the RAC in 1992, SJG recovered $25.9 million through rates as of
March 31, 2001.

Note 6.  Long-Term Debt:

     In July 2000, SJG issued $35 million of debt under a Medium Term Note
Program established October 1998.  Notes totaling $15 million were issued at
7.70%, maturing in 2015; notes totaling $10 million were issued at 7.97%,
maturing in 2018; and notes totaling $10 million were issued at 7.90%, maturing
in 2030.  A remainder of $35 million is authorized to be issued under this
program through December 2001.

                                     SJG-11


          Item 2.   Management's Discussion and Analysis of Results of
                       Operations and Financial Condition


Overview

     South Jersey Gas Company (SJG) is a regulated natural gas utility.  SJG
distributes natural gas to almost 284,000 customers in the seven southernmost
counties of New Jersey.  SJG also:

     *  makes off-system sales of natural gas on a wholesale basis to various
        customers on the interstate pipeline system;

     *  transports natural gas purchased directly from producers or suppliers
        for our own sales and for some of our customers;

     *  services appliances via the sale of appliance warranty programs, as
        well as on a time and materials basis.

     South Jersey Industries, Inc. (SJI) owns all of the common stock of SJG.

Forward Looking Statements

     This report contains certain forward-looking statements concerning
projected financial and operating performance, future plans and courses of
action and future economic conditions.  All statements in this report other
than statements of historical fact are forward-looking statements.  These
forward-looking statements are made based upon management's expectations and
beliefs concerning future events impacting the company and involve a number of
risks and uncertainties.  We caution that forward-looking statements are not
guarantees and actual results could differ materially from those expressed or
implied in the forward-looking statements.  Also, in making forward-looking
statements, we assume no duty to update these statements should expectations
change or actual results and events differ from current expectations.

     A number of factors could cause our actual results to differ materially
from those anticipated, including, but not limited to the following:  general
economic conditions on an international, national, state and local level;
weather conditions in our marketing areas; changes in commodity costs;
regulatory and court decisions; competition in our regulated activities; the
availability and cost of capital; costs and effects of legal proceedings and
environmental liabilities; and changes in business strategies.

Customer Choice Legislation

     Effective January 1, 2000, all residential natural gas customers in New
Jersey are able to choose their gas supplier under the terms of the Electric
Discount and Energy Competition Act of February 1999.  Commercial and
industrial customers have had the ability to choose gas suppliers since 1987.
SJG's residential customers have been able to choose a gas supplier since April
of 1997 under a pilot program.  As of March 31, 2001, 33,156 SJG residential
customers chose a natural gas supplier other than the utility.  This number
decreased from 47,281 at March 31, 2000 as third party marketers were unable to

                                     SJG-12


offer natural gas at prices competitive with those available to consumers under
regulated utility tariffs.  The bills of customers choosing to purchase natural
gas from providers other than the utility are reduced for cost of gas charges
and applicable taxes.  The resulting decrease in SJG's revenues is offset by a
corresponding decrease in gas costs and taxes.  While customer choice can
reduce utility revenues, it does not negatively affect SJG's net income or
financial condition.

Energy Adjustment Clauses

     SJG's Board of Public Utilities approved Temperature Adjustment Clause
(TAC) had the following impacts on 2001 and 2000 first quarter net earnings:

                                                      2001           2000
                                                    --------       --------
          TAC Adjustment (Decrease) Increase to
           Net Income ($ in thousands)

                Quarter Ended 3/31                   $(140)         $1,290


     While the revenue and income impacts of TAC adjustments are recorded as
incurred, cash inflows or outflows directly attributable to TAC adjustments
generally do not begin until the next TAC year.  Each TAC year begins
October 1.

Results of Operations - Three Months Ended March 31, 2001
Compared to Three Months Ended March 31, 2000

Operating Revenues

     Revenues increased $72.5 million in the first quarter of 2001 compared
with the prior year period.  The primary reasons for the increase were
increased off-system sales; higher rates resulting from increases in the
Levelized Gas Adjustment Clause (LGAC) that reflect higher gas costs; and 7,856
additional customers.  The increase in off-system revenues was due to higher
prices for natural gas sold.  Total volumes of gas sold off-system were lower
in 2001 than in the prior year.

     Weather in the first quarter of 2001 was 8.1% colder than the prior year
period.  Weather was also .2% colder for the first quarter than the 20-year
average.  Revisions to SJG's TAC that became effective in October 1998
significantly reduced the weather related volatility in our revenues.
Revenues for 2001 will be closely tied to the 20-year normal temperatures
and not actual weather conditions.

     The following is a comparison of operating revenue and throughput for the
three month period ended March 31, 2001 vs. the same period ended March 31,
2000.

                                     SJG-13


                                                           1st Quarter
                                                        2001          2000
                                                      --------      --------
     Utility Operating Revenues (Thousands):
       Firm
         Residential                                  $ 96,359      $ 70,673
         Commercial                                     39,833        16,280
         Industrial                                      1,948         2,000
         Cogeneration & Electric Generation                648         1,222
         Firm Transportation                             9,432        14,012
                                                      --------      --------
           Total Firm Utility Operating Revenues       148,220       104,187

       Interruptible                                       686           499
       Interruptible Transportation                        312           484
       Off-System                                       67,195        39,226
       Capacity Release & Storage                        1,826         1,861
       Other                                             1,217           745
                                                      --------      --------
           Total Utility Operating Revenues           $219,456      $147,002
                                                      ========      ========

     Throughput (MMcf):
       Firm
         Residential                                     9,157         8,481
         Commercial                                      4,214         2,166
         Industrial                                        148           106
         Cogeneration & Electric Generation                 24           138
         Firm Transportation                             5,784         8,465
                                                      --------      --------
           Total Firm Throughput                        19,327        19,356

       Interruptible                                        59            49
       Interruptible Transportation                        621           840
       Off-System                                        9,470        12,070
       Capacity Release & Storage                        6,054        10,539
                                                      --------      --------
           Total Throughput                             35,531        42,854
                                                      ========      ========

Gas Purchased for Resale

     Gas purchased for resale increased $72.5 million for the first quarter of
2001 compared with the same period in 2000 due principally to increased gas
costs for both local distribution and off-system sales.  SJG's gas cost during
the first quarter of 2001 averaged $6.87/dt compared with $2.87/dt in 2000.
Unlike gas costs associated with off-system sales, changes in the cost of gas
sold to utility ratepayers are not reflected in Gas Purchased for Resale as

                                     SJG-14


incurred.  Fluctuations in gas costs to ratepayers not reflected in current
rates are deferred and addressed in future periods under the LGAC.  Higher gas
costs were reflected in rates via a series of LGAC increases since November
2000.  Gas supply sources include contract and open-market purchases.  SJG
secures and maintains its own gas supplies to serve its customers.

Operations

     A summary of net changes in Utility Operations and Other Operations (in
thousands):

                                              Three Months Ended
                                                  March 31,
                                                2001 vs. 2000
                                                -------------

          Other Production Expense                    $(18)
          Transmission                                 (23)
          Distribution                                (249)
          Appliance Service - Net                     (138)
          Customer Accounts and Services               250
          Sales                                        (36)
          Administration and General                   (78)
          Other                                          6
                                                  --------
                                                     $(286)
                                                  ========


     Distribution expenses decreased in the first quarter of 2001 as costs
related to our unionized workforce were avoided as a result of a work stoppage
that ended on January 17, 2001.  Expenses related to performing critical
operational functions during the work stoppage were recognized under
Administration and General.  Customer Accounts and Services costs increased due
to higher bad debt expenses directly related to a significant increase in gas
costs.

Other Operating Expenses

     A summary of principal changes in other consolidated operating expenses
(in thousands):

                                              Three Months Ended
                                                  March 31,
                                                2001 vs. 2000
                                                -------------

          Maintenance                                 $115
          Depreciation                                 263
          Income Taxes                                (313)
          Other Taxes                                  (81)


                                     SJG-15


     Depreciation is higher due to increased investment in property, plant and
equipment by SJG.  Income Tax changes reflect the impact of changes in pre-tax
income.

Interest Charges

     Interest charges increased in the first quarter of 2001 compared with the
prior year period.  The rise in interest expense was due to increased debt
outstanding and higher interest rates.  The debt was incurred primarily to
support the expansion and upgrade of SJG's gas transmission and distribution
system, as well as higher levels of unrecovered gas costs.

Net Income Applicable to Common Stock

     The details affecting the changes in net income and earnings per share are
discussed under the appropriate captions above.

Liquidity

     The seasonal nature of gas operations; the timing of construction and
remediation expenditures and related permanent financing; as well as mandated
tax and sinking fund payment dates require large, short-term cash requirements.
These requirements are generally met by cash from operations and short-term
lines of credit.  We maintain short-term lines of credit with a number of
banks, totaling $160.0 million, of which $67.5 million was available at March
31, 2001.  The credit lines are uncommitted and unsecured with interest rates
typically available based upon the Federal Funds Rates or London Interbank
Offered Rates (LIBOR).

     The changes in cash flows from operating activities (in thousands):

                                                     Three Months Ended
                                                         March 31,
                                                       2001 vs. 2000
                                                       -------------
     Increases/(Decreases):
     Net Income Applicable to Common Stock                  ($462)
     Depreciation and Amortization                            (60)
     Provision for Losses on Accounts Receivable              447
     Revenues and Fuel Costs Deferred - Net                (8,796)
     Deferred and Non-Current Income Taxes and
      Credits - Net                                         3,248
     Environmental Remediation Costs-Net                      759
     Accounts Receivable                                    1,939
     Inventories                                            7,858
     Prepayments and Other Current Assets                      59
     Prepaid and Accrued Taxes - Net                       (1,152)
     Accounts Payable and Other Accrued Liabilities       (11,466)
     Other - Net                                           (1,192)
                                                          -------
           Net Cash Provided by Operating
            Activities                                    ($8,818)
                                                          =======


     Depreciation and Amortization are non-cash charges to income and do not
impact cash flow.  Changes in depreciation cost reflect the effect of additions
and reductions to fixed assets.

     Decreases in Revenues and Fuel Costs Deferred - Net reflect the impact of
payments or credits to customers for amounts previously overcollected and the
undercollection of fuel costs resulting from increases in natural gas costs.
Increases reflect the impact of overcollection of fuel costs or the recovery of
previously deferred fuel costs.

     Changes in Deferred and Non-Current Income Taxes and Credits - Net
represent the differences between taxes accrued and amounts paid.  Generally,
deferred income taxes related to deferred fuel costs will be paid in the next
year.

     Changes in Environmental Remediation Costs - Net represent the differences
between amounts expended for environmental remediation compared with amounts
collected under the RAC and insurance recoveries.

     Changes in Accounts Receivable are primarily due to changes in off-system
sales activity and SJG's sales volumes.  Weather and commodity prices are the
variables that primarily impact these sales.  Changes impact cash flows when
collected in subsequent periods.

     Changes in Inventories reflect the impact of seasonal requirements,
temperatures and commodity price changes.

     Changes in Prepaid and Accrued Taxes - Net reflect the impact of
differences between taxes paid and taxes accrued.  Significant timing
differences exist in cash flows during the year.  Approximately 50% of SJG's
taxes are paid in installments during the first half of the year and the
remaining 50% are paid on May 15 of each year.  SJG uses short-term borrowings
to pay taxes, resulting in a temporary increase in the short-term debt level.
The carrying costs of timing differences are recognized in base utility rates.

     Changes in Accounts Payable and Other Current Liabilities reflect the
impact of timing differences between the accrual and payment of costs.

     Changes in Other - Net reflect numerous changes in noncurrent assets and
liabilities, including accrued deferred income taxes.

                                     SJG-17


Regulatory Matters

     Rate Actions

     In August 2000, SJG filed its annual LGAC, TAC and Demand Side Management
Clause for 2000-2001.  The filing requested a $35.0 million increase to its
LGAC.  However, due to unprecedented natural gas price run-ups, SJG filed for
an additional increase in October 2000.

     On November 16, 2000, SJG received approval to increase its LGAC.  The
impact of this increase was approximately 19.0% to a typical residential
heating customer.  The BPU also approved the creation of a flexible pricing
mechanism, allowing for five additional 2.0% increases effective for December
2000 and January, February, March and April of 2001.  In March 2001, the BPU
approved additional LGAC rate increases for SJG using a flexible pricing
mechanism.  Additional rate increases of 2% in May, June and July 2001 were
approved.  In addition, the ruling permits SJG to recover unrecovered gas costs
as of October 31, 2001 with interest at 5.5% over a three-year period,
beginning December 1, 2001.  Recoverable interest costs will begin accruing on
April 1, 2001.

     Other matters are incorporated by reference to Note 3 to the condensed
consolidated financial statements included as part of this report.

Capital Resources

     SJG has a continuing need for cash resources and capital, primarily to
invest in new and replacement facilities and equipment and for environmental
remediation costs.  Net construction and remediation expenditures for the first
three months of 2001 amounted to $0.8 million.  The costs for 2001, 2002 and
2003 are estimated at approximately $45.0 million, $50.7 million and $48.9
million, respectively.  We expect to fund these expenditures from several
sources, which may include cash generated by operations, temporary use of
short-term debt, sale of medium-term notes, capital leases, RAC recoveries,
insurance recoveries and equity infusions from SJI.

Ratio of Earnings to Fixed Charges

     The company's ratio of earnings to fixed charges for each of the periods
indicated is as follows:

                                                     Twelve Months
                                                         Ended
                 Years Ended December 31,              March 31,
     --------------------------------------------    -------------
     1996      1997      1998      1999      2000         2001
     ----      ----      ----      ----      ----         ----
     2.5x      2.6x      2.2x      2.5x      2.5x         2.6x


                                     SJG-18


     The ratio of earnings to fixed charges represents, on a pre-tax basis, the
number of times earnings cover fixed charges.  Earnings consist of net income,
to which has been added fixed charges and taxes based on income of the company,
excluding the cumulative effect of an accounting change.  Fixed charges consist
of interest charges and preferred securities dividend requirements and an
interest factor in rentals.

Other Events

     SJG employs 401 workers who are members of two separate unions.  Following
the expiration of a labor contract, the 354 members of our largest union
commenced a work stoppage on November 9, 2000.  The remaining 47 unionized
employees also commenced a work stoppage on December 13, 2000.  SJG's unionized
employees returned to work on January 17, 2001, agreeing to a new 4-year
contract.  Key elements of the contract include employee contributions toward
healthcare costs, wage increases, revised wage structures for new employees,
and revisions to sick-time policies.  During the work stoppage, operation
critical work was conducted mostly by SJI's non-union personnel.  As a result
of the nature of SJG's operations, the work stoppage did not materially effect
the operational or financial condition of SJG.


      Item 3.  Quantitative and Qualitative Disclosures About Market Risk

     We have exposure to interest rate risk related to short-term debt and, to
a much lesser degree, commodity price risk.  For information regarding our
exposure related to these risks, see Item 7A in our Form 10-K for the year
ended December 31, 2000.  Our market risks have not materially changed from
December 31, 2000.




                                     SJG-19



                          PART II -- OTHER INFORMATION


                           Item l.  Legal Proceedings

     Information required by this Item is incorporated by reference to Part I,
Item 1, Note 5, beginning on page 10.


                   Item 6.  Exhibits and Reports on Form 8-K

                                      None



                                     SJG-20



                                   SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                            SOUTH JERSEY GAS COMPANY
                                  (Registrant)



     Dated:  May 15, 2001     By:  /s/ David A. Kindlick
                                   David A. Kindlick
                                   Senior Vice President, Finance and Treasurer





     Dated:  May 15, 2001     By:  /s/ George L. Baulig
                                   George L. Baulig
                                   Senior Vice President & Corporate Secretary



                                     SJG-21