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Association Officials: Winter Heating Bills Will Force Legislation

The public outcry over soaring energy prices this winter should force Congress to take action to boost domestic supply of gas and oil either before the Christmas holiday or early next year, major energy association officials predicted on Friday.

American Gas Association President David Parker said he expects that drilling authorization in the Arctic National Wildlife Refuge (ANWR) will pass Congress before the end of the year. The House Resources Committee in October voted out legislation that would permit interested coastal states to opt out of existing moratoriums on oil and natural gas drilling on the federal Outer Continental Shelf (OCS) and would authorize drilling in the northern coastal region of Alaska's Arctic National Wildlife Refuge (ANWR).

"I would suggest that come February when the Congress recesses for the Presidents' Day holidays after these natural gas bills have fully impacted the public for two or three months that there will be early action next year for taking a hard look at the Outer Continental Shelf as an area that need [greater drilling access]," Parker said at a breakfast sponsored by Energy Daily.

He cited a number of factors that should contribute to a new policy decision from Congress on increasing natural gas supply next year. He noted that 2006 is an election year and key states in the Midwest could see a 71% increase in their heating bills this winter compared to last winter when prices were double the prior winter. Another factor is the likelihood that the supply-demand balance isn't likely to improve next year because of the large amount of new gas-fired power generation that will be operating next summer, Parker noted.

"Winter 2006-2007 will be equally as bad as this winter, and that will come right on the heels of an election. So my sense is that Congress will come back early in the Spring and address this issue."

Tom Kuhn, president of the Edison Electric Institute, agreed. "As they say, Congress is only good in acting on a crisis. The first energy bill came from a series of crises from the California energy crisis to the blackout. They addressed a number of issues particularly on the electricity side on nuclear and coal and other things, but they didn't address the oil and gas side of the equation, and I think the crisis now is primarily on the oil and gas side, and particularly on the natural gas side," said Kuhn. "They are going to have to react to the higher bills that constituents will be paying this wintertime."

Parker said if the winter is colder than normal, there could be some supply shortages for interruptible customers. "Our sense is that based on NOAA's 90-day outlook with the eastern half of the United States [expected to have normal temperatures], warmer than normal in the western half and Southwest..., the expectation is that firm customers will have all the gas that they need," said Parker.

Interruptions are possible for interruptible customers, he said. He referred to a recent estimate by the Interstate Natural Gas Association of America that there is a 30% chance that IT customers in the Northeast will face supply cuts and a 10% chance that IT customers elsewhere in the United States could face cuts. "Pray for warm weather," Parker said.

"If it is very cold, we could have some real challenges providing supply to interruptible customers come February or March," he said. "Based on NOAA's predictions...we are not anticipating a colder than normal winter.

"Home heating is safe, but it's going to be pricey, and that's the main concern," he said. "This nation needs to do better job in terms of addressing a long-term energy solution."

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