Toward a Rational Natural-Gas Policy; Congress and the Reality of Supply and Demand
Byline: Jack N. Gerard, SPECIAL TO THE WASHINGTON TIMES
Over the past several months, America has at last awakened to the natural-gas crisis. Today, it stands as one of the most important issues facing our nation.
Among its damaging consequences are the erosion of the U.S. manufacturing economy and the permanent loss of millions of jobs over the past five years. Yet until recently it was a "stealth" crisis because to most Americans - even many members of Congress - natural gas was a mysterious commodity. Its nearly ubiquitous use in manufacturing was largely unknown, as was the fact that U.S. natural-gas prices are consistently the highest in the world, putting our country at an enormous disadvantage.
From steel, aluminum, forest and paper and cement to carpet, bricks, fertilizer and my business - the business of chemistry - natural gas is vital to production. In the case of chemistry and fertilizer, natural gas is not only a heat and power source, but also a raw material. For all of these industries, when U.S. natural-gas prices double, triple, quadruple and more in a few short years, large companies and small businesses alike must close plants, lay off workers, relocate overseas or raise prices for the goods that consumers use every day.
The economic "ripple" effects are substantial: 2.9 million lost manufacturing jobs, 100,000 chemical-industry jobs, 182,000 forest and paper industry jobs, 36 percent of the U.S. fertilizer industry, billions in lost business. Consumers are feeling it, too. Despite this winter's record warm weather, their heating bills are still 24 percent higher than last year, according to the U.S. Energy Information Administration. And they're paying more for nearly all of the manufactured goods they buy, because nearly all manufactured goods contain some amount of natural gas.
It wasn't always this way. In the mid-1990s, U.S. natural-gas prices were in the $2 per-MMBtu-range. Manufacturers could safely build their business around the use of natural gas. Industrial, commercial, residential and electric utility users did not "compete" for natural gas the way they do today. Policy-makers did not need to examine natural-gas policy because natural gas was affordable and available to meet the nation's needs. If it's not broken, don't fix it. But with U.S. natural-gas prices hovering around $7 per MMBtu, down from $14 to $15 a few months ago (but still triple those of five years ago), now we are in a different world. …