Creating a Strategic Natural Gas Reserve similar to the Strategic Petroleum Reserve would not be a good idea in light of the limited amount of domestic gas supply currently available, a group of industrial energy consumers told the Bush administration last Thursday.
"If the U.S. had an abundant supply of natural gas that exceeded demand, a Strategic Natural Gas Reserve (SNGR) would be a good idea and one we would support. However, even before Hurricane Katrina, U.S. demand significantly exceeded supply and resulted in the highest price natural gas in the world. This being the case, establishing a Strategic Natural Gas Reserve would not be helpful and could very well send the market a wrong message," wrote Paul Cicio, executive director of Industrial Energy Consumers of America (IECA), in letters to Energy Secretary Samuel Bodman and Interior Secretary Gale Norton.
The message "would imply that new or additional supplies of natural gas might be used to fill the reserve rather than reduce the U.S. price to globally competitive and affordable levels," he said.
Instead of a gas reserve, "IECA strongly encourages the development of commercial natural gas storage as a much better alternative. Since 1988, total underground natural gas storage capacity has increased by only 1.4% but total national consumption has increased by over 24%. Natural gas in commercial storage is additional usable working inventory unlike that of natural gas that would be placed in the SNGR and only used in the event of emergencies."
Bodman said last week that a Strategic Natural Gas Reserves was one of several proposals the White House was considering to deal with high energy prices and restricted supply. Other proposals on the table included funding for the Low-Income Home Energy Assistance Program and expanded development of the federal Outer Continental Shelf, he noted.
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