Gas crisis

June 19, 2003
In 2001, the US government declared an energy crisis. Two years later, policymakers are more specific: Now there is a natural gas crisis.

Maureen Lorenzetti


In 2001, the US government declared an energy crisis. Two years later, policymakers are more specific: Now there is a natural gas crisis.

Recent US government storage data may dampen, but not quiet, Washington's renewed attention to natural gas markets. Most elected officials are not energy experts, but they recognize prices still could jump before or during the winter heating season.

Gas summit
At the behest of Energy Sec. Spencer Abraham, the National Petroleum Council will hold an emergency Natural Gas Summit June 26. Abraham reassured 30 US senators in a June 6 letter that the White House recognizes that the country cannot just drill its way out of the problem over the next 12-18 months. He told Senate Minority Leader Tom Daschle (D-SD) and others that the policy emphasis must be on conservation, energy efficiency, and fuel-switching.

But Congress and the White House also will spend the summer looking at ways to boost supply for the medium and long term. A pending energy bill passed by the House and now debated in the Senate aims to stimulate domestic oil and gas production, mainly through royalty relief and expanded tax incentives. Final discussions between the House and Senate may coincide with a natural gas study the NPC is releasing in September.

The legislation is not oriented toward short-term fixes, but if prices go sky high, there is a small chance Congress may flirt with something extreme, such as price controls, according to some analysts.

"If natural gas markets go wildly out of control, we cannot rule out Congress attempting to cap prices, at least temporarily," said Christine Tezak, energy analyst, Schwab Capital Markets, Washington, DC.

New and familiar voices
With natural gas supply woes in the political spotlight, LNG producers see a unique opportunity to have their voice heard. In April, the US Energy Association sponsored the creation of the International LNG Alliance, a "broad-based strategic alliance of LNG interests."

In a statement to the House and Energy Commerce Committee, the alliance said LNG could meet 11% of US demand by 2010, but private-public partnerships are needed to "educate policymakers and the public about the facts of LNG safety and use."

USEA's investment paid off handsomely when Federal Reserve Chairman Alan Greenspan told the committee LNG is a good way for the country to extract itself from volatile price swings (OGJ Online, June 11, 2003).

Multinational oil companies like ExxonMobil Corp. may largely agree with Greenspan, but most US independents are wary about expanding LNG supplies.

"With all due respect to Chairman Greenspan, we think his advice to Congress misses the mark," said Jack Ekstrom, chairman of the Western Business Roundtable's energy committee and an executive with Evergreen Resources Inc., Denver. "The answer to potential natural gas shortages is not to make America even more reliant on foreign energy. It is to produce more energy here at home."

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