February 4, 2005

It is difficult to find agreement inside the Beltway, nowadays – especially on an issue as divisive as the nation’s energy policy.   So we were encouraged when a diverse coalition of business and environmental groups came together recently to offer solutions to address America’s natural gas shortage.

In a memo to the U.S. House and Senate, major companies joined with environmental advocates to urge Congress to craft a comprehensive, balanced natural gas policy that addresses high prices and production declines.  Signers of the memo include Dow Chemical Company, the Natural Resources Defense Council, the Alliance to Save Energy, and the American Chemistry Council.

In their memo, the groups specifically endorsed increasing supplies of liquefied natural gas, or LNG – natural gas that has been converted into liquid, allowing for safe transportation and storage.  This memo follows a recommendation by the independent Commission on Energy Policy, which concluded that the United States must encourage the construction of new LNG terminals.

These voices are part of a growing choir of experts who insist that LNG must play a larger role in our energy portfolio if we are to meet expected growth in demand. 

For half a century, LNG has been safely transported and stored around the globe.  Some countries, like Japan and South Korea, rely on it almost exclusively for their natural gas needs.  Yet less than one percent of U.S. natural gas supply is from LNG, despite our nation’s record consumption.
That is why we are working to make LNG a more vital part of a comprehensive, diversified national energy plan.

Natural gas is clean burning.  It heats and cools our homes, provides fuel for cooking, generates electricity (with fewer emissions than other fossil fuels), and serves as a raw material to make everything from plastics to medicines to fertilizers.  Overall, it provides a quarter of America’s energy needs. 

But high natural gas prices have forced some manufacturing companies to move operations overseas where the fuel is often much less expensive. 

 

A prime example can be found in the fertilizer industry.  About half of America’s nitrogen fertilizer – made mostly from natural gas – is imported today, due mostly to high gas prices.   Since 2001, at least 15 U.S. fertilizer plants have closed or quit operations.  This could have a severe impact on U.S. farmers and those who consume the food they produce.

 

On another front are chemical manufacturers.  Until 2002, this industry had been one of the nation’s few sectors with a positive balance of trade.  But sustained high natural gas prices transformed billion dollar trade surpluses into deficits, and now there is a real danger that the nation’s largest manufacturing export sector could see its production shift overseas.

 

Over the past four years, U.S. consumers have paid an estimated $130 billion more for natural gas than in the prior 48 months.  Now, even Federal Reserve Chairman Alan Greenspan is asking Congress to take steps to boost our LNG capacity, to serve as a “safety valve” to ease price volatility. 

 

Vast amounts of natural gas around the globe are ready to be developed, from places such as the Caribbean, Australia, and Eastern Europe – areas that look more favorably on U.S. interests.  And more than 30 LNG terminals are in various stages of planning throughout North America.

 

The bad news is that “not-in-my-backyard” opposition, coupled with litigation-minded outside interests in certain areas – particularly Southern California and New England – has delayed many of these terminal plans.   Ironically, these same regions consume massive amounts of natural gas. 

 

The opposition to LNG by a handful of communities is costing the nation dearly. 

 

Last year, we introduced bipartisan legislation to expand America’s LNG capacity by establishing a more predictable, streamlined process for the construction and expansion of LNG terminals – allowing industry, communities, and government to work together to ensure adequate natural gas supplies.  Our bill will allow for substantial input by all parties, but not unwarranted and open-ended delay. 

 

We are currently working with Congressional leaders to include this legislation in the new draft of the comprehensive energy bill, and we are optimistic about our chances.

 

Regardless of political party, most members of Congress agree that energy supply is a national issue.  Our economy, jobs, and quality of life depend on a foundation of plentiful, affordable energy.  LNG can and should play a sizable role in America’s energy mix.