The American Chemistry Council, representing industrial users of natural gas, has called upon President George W. Bush and Congress to take steps to avert what ACC calls "a looming natural gas crisis."
As natural gas prices increase, the costs of most other goods also will increase, the ACC said, adding that every recession since World War II has been preceded by a run-up in energy prices.
The March contract for natural gas surged to a record high of $11.89/Mcf in overnight electronic trading Feb. 24 on the New York Mercantile Exchange before stalling early in the next trading session at $10.10/Mcf—the previous record set in December 2000.
"Every major recession in modern American history has been preceded by a dramatic increase in fuel prices, and immediate action is needed to prevent a potential recurrence," an ACC news release said.
ACC Pres. Greg Lebedev wrote lawmakers a letter saying that some US chemical production already has been taken offline because it is too expensive to operate.
"Americans will pay the price. They will feel the effect of skyrocketing natural gas prices in the form of more expensive food, spiraling home heating bills, and higher prices for many pharmaceuticals and consumer goods," Lebedev said.
He called upon Bush and Congress to open promising areas to exploration and production, to support federal efforts to streamline pipeline construction projects, and to enable timely increases in natural gas imports via pipelines, particularly from Canada, and also LNG imports.
"As we fight terrorism and face a potential war, America will rely on its strong chemical infrastructure, recognized by the US Department of Homeland Security as critical in providing the products that make our military, police, and emergency responders the strongest and best equipped in the world," Lebedev said in his letter.
Industry comment
Mississippi Chemical Corp. of Yazoo City, Miss., said it has idled "indefinitely" activity at its Donaldsonville, La., No. 2 ammonia plant, which has been down since early January.
The No. 1 ammonia plant, currently idled, will continue to operate as swing production to supply ammonia as needed based on market conditions and customer demand, the company said.
On Feb. 26, employees were notified of the operational changes at the ammonia plants and also were informed that the work force was being reduced by 24 full-time positions, Mississippi Chemical added.
"The company continues to be impacted negatively by the difficult operating environment caused by extraordinarily high natural gas prices," said Charles O. Dunn, Mississippi Chemical president and CEO. "It is unfortunate that we are faced with having to make these choices, but we have to do what is necessary for the continued well being of the company," he added.
Terra Industries Inc. of Sioux City, Iowa, issued a Feb. 27 news release saying it had ceased ammonia production at its Blytheville, Ark., and Woodward, Okla., facilities because of high natural gas prices. March production plans will be announced soon, the company said.
