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Breaking News
Fall 2003
Natural Gas Crisis Fuels Debate Across U.S.
"Increasing natural gas supply in the short run is not a realistic possibility.
New pipelines, increased drilling, and the construction of new Liquefied Natural Gas
facilities all require significant lead time. However, increasing the energy efficiency of
our appliances, constructing new wind, solar and geothermal energy facilities, and cutting
back on excess energy consumption can all occur within the next 6-18 months."
Carol Werner, Executive Director, Environmental and Energy Study Institute
"The United States has an abundant supply of natural gas, but outdated federal and
state policies that govern exploration and production have kept supply flat while a host
of policies promote increased use of natural gas, such as for electric-power generation.
Consumers are literally paying the price for these contradictions in policies."
Wm. Michael Warren, Jr., American Gas Association Board of Directors.
A year ago the wholesale price of natural gas stood at about $3 per thousand cubic feet.
It is now over $6 – and things are expected to get worse before they get better, most
experts agree.
The price escalations and what to do about them have resulted in action, concern and
debate from every corner of society –
Congress, government agencies, the Federal Reserve chairman, business and industry,
utilities and their trade groups, low-income energy advocates, and renewable, conservation
and environmental groups. The "natural gas crisis" is front-page news, with gas
prices blamed for curbing or shutting down industrial production, costing jobs and
preventing economic recovery.
The disaster facing low-income families this coming winter – families who
haven’t yet recovered from last winter’s heating bills – has also been
covered. (Click here for more
information.)
Various entities have proposed short- and long-term solutions to the crisis, most of
which fall into two opposing camps: more exploration and development of domestic gas
reserves to greater reliance on energy efficiency, conservation and renewables. Here is a
snapshot of the latest news and views:
- The Energy Information Administration, in its end-of July short-term market
report, said that gas storage levels have
accelerated, leading to good chances of storage reaching a normal level by the beginning
of the heating season. Additionally, relatively mild summer weather in much of the country
has depressed natural gas spot prices, but this is subject to change pending the remaining
summer weather.
- On July 9 Department of Energy unveiled a "Smart
Energy Campaign" with regional meetings and events and public service
announcements to educate consumers on energy-saving steps they can take, with an emphasis
on natural gas.
- The National Association of Regulatory Utility
Commissioners (NARUC) polled its members and found that most are bracing for a
difficult winter and are approaching gas price increases with a variety of tactics –
from holding investigations, to researching alternative purchasing options such as
hedging, to educating consumers through press releases, consumer alerts, and public
meetings.
- At its July meeting, NARUC passed a resolution to
develop a tool kit on anticipated natural gas price spikes for the use of state
commissions in addressing high natural gas prices and high price volatility.
- The American Chemistry Council, which represents the leading comcpanies in chemical
manufacturing, in a study
released in June found that historically high natural gas prices have led to the loss
of thousands of manufacturing jobs and are preventing the creation of more than 100,000
new jobs for Americans.
- The Alliance to Save Energy (ACE) called on the nation’s industrial leaders to take
the "10 Percent Pledge" to reduce their energy use and costs by 10 percent
"to help ease the natural gas supply and price crisis looming over the coming
winter’s heating season."
- These groups, along with other conservation and renewables groups, have issued proposals
to jumpstart energy efficiency and renewable energy initiatives, including more funding
for energy efficiency deployment programs, expanding and extending the production tax
credit for renewable energy technologies, enacting an aggressive renewable portfolio
standard, and creating a national public benefits fund.
- The American Gas Association has
called upon Congress to "remove the unnecessary barriers to domestic natural gas
development," by (among other things) expediting environmental review and permitting
of natural gas pipelines and drilling programs, allowing more drilling in the lower 48
states, constructing an Alaskan natural gas pipeline to bring plentiful Alaska natural gas
to the lower 48, greater production of coalbed methane, and more federal and state efforts
to expand imports of liquefied natural gas.
- As part of its implementation of President Bush’s National Energy Policy, the
Bureau of Land Management on August 7 issued new policies
aimed at reducing or eliminating impediments to oil and gas leasing on BLM lands in parts
of five Rocky Mountain states (Montana, Wyoming, Utah, Colorado and New Mexico). The
policies, which take effect immediately, instruct BLM land-use planners to evaluate the
necessity of current constraints on energy development in high-potential oil and gas
areas, and are a major step toward implementing the Administration's long-standing goal of
opening the West to increased exploitation of oil and gas resources.
- The National Energy Accessibility and Affordability Project (NEAAP) a project of the
National Center for Appropriate Technology, in July made public its Residential Energy Efficiency Database, though which
residential electric and natural gas customers can find out what programs their utilities
offer, such as home energy audits, rebates for energy efficient appliances, and zero- or
low-interest loans to upgrade insulation or replace old heating and cooling equipment.
Database users can search for residential energy efficiency programs by state(s), utility
name, utility type (investor-owned, municipal, etc.), program type (appliances, audits,
financing, heating/cooling, lighting, special rates, and weatherization) or by keyword(s).
Users of the database are invited to submit program corrections or additions through an
online update form.
New from the National Regulatory Research Institute:
"State commissions act in anticipation of high natural gas prices next
winter… Commissions want to make sure gas utilities go the "extra mile" to
keep gas prices down…and inform customers what to expect next winter…New York,
Kentucky, Arkansas, and Iowa take aggressive steps to warn consumers… Arkansas,
Washington, Delaware, Indiana, Oregon, Michigan, Mississippi and Montana schedule public
sessions…
Some commissions review gas utilities’ supply plans to make sure that they promote
price stability through hedging strategies…Consumers need special protection in gas
markets from economic losses caused by high or rising prices…For the vast majority of
markets, customers can simply reduce consumption…Small customers regard natural gas
as essential, with little opportunity for substitution in the short run…NARUC public
information officers’ survey of state actions is at www.nrri.ohio-state.edu. "
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