Nick Snow
Washington Correspondent
WASHINGTON, DC, Mar. 31 -- Congress should move quickly to open what amounts to a strategic reserve of natural gas off US coasts, National Association of Manufacturers Pres. John Engler urged.
"When it comes to oil, you often hear talk about a Strategic Petroleum Reserve," he told the Economic Club of Pittsburgh Mar. 29. "We also have another reserve—this one unplanned—for natural gas. It's called the Outer Continental Shelf."
Action is necessary to reverse policies that have encouraged gas use, restricted producer access to the gas resource, and consequently driven up gas prices, the former Michigan governor said.
He cited PPG Industries to show how rising gas prices hurt businesses. "Every time the price of natural gas increases by another dollar, it results in an unbudgeted expense to the company of $70 million," he said.
He said US Steel Corp. Chief Executive John P. Surma Jr. has told him that each additional dollar paid for gas costs the steel manufacturer $80 million. "For the steel industry as a whole, it's $300 million," Engler said.
The chemical industry, he added, has lost 100,000 jobs and $50 billion in business largely because of rising energy prices.
Contradictory policies
Policies favoring gas use have pushed up domestic demand and raised prices to record levels, Engler noted. Other policies not only restrict access to potential domestic supplies but also limit construction of LNG import terminals.
US manufacturers thus pay several times what many of their international competitors do for gas.
But while federally imposed moratoriums and withdrawals block expansion of oil and gas activity on the OCS, Cuba is moving ahead to develop its offshore resources, Engler said.
"When you hear objections from the environmental lobby about the risk of exploring deep waters off the Florida coast, you should know that Cuba has licensed foreign firms to develop gas resources in waters as close as 60 miles to the US shore. In years ahead, that Cuba-backed drilling could come as close as 45 miles," he said. "To me, it makes no sense for Venezuelan or Chinese firms to be partnering with their Cuban friends to drill 45 miles off our coast while Florida's US senators want US companies to stay 260 miles off our shores."
Engler said NAM recently established a coalition, the Consumer Alliance for Energy Security, with the American Chemistry Council, the American Forest and Paper Association, and the Agriculture/Energy Alliance in an effort to influence the debate on OCS leasing.
He also called for leasing of the Arctic National Wildlife Refuge Coastal Plain.
Engler said conservation, which leasing opponents promote as an alternative to new supply and which manufacturers embrace, isn't enough. "You cannot power a forge or heat a warehouse or fuel your trucks through conservation," he said. "The supply and demand equation requires supply."
Contact Nick Snow at [email protected].
