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NAM President Calls on Congress to Act on 'Bold, Forward-Reaching' Energy Bill

November 21, 2005
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The energy policy act signed into law by President Bush in August "was a start," but the nation needs energy legislation that goes far beyond that to address the run-up in prices and diminishing supplies, said the head of the National Association of Manufacturers (NAM) last Tuesday.

"It's got to be bold. It's got to be forward-reaching, and it's got to be shorn of the impediments that were imposed by groups...that want to hold us back," said former Michigan Gov. John Engler, now president and CEO of NAM, at a conference sponsored by Rockwell Automation in St. Louis, MO.

"The question before America's policymakers is this: Do we want the United States to be able to compete and succeed in the marketplace of the future, or are we willing to allow political expediency drive our competitive edge into the ground?" he asked. "Some want to look past our borders and blame others for the predicament in which we now find ourselves. But no one in Beijing or Brussels is holding us back when it comes to energy. We need to take action ourselves. Right here in America."

The United States is being left in the dust when it comes to expanding its energy supplies, Engler said. Japan is building 23 liquefied natural gas (LNG) terminals, while the U.S. has built four or five, he noted. China is spending $50 billion to build 30 new nuclear power plants in the next 15 years. "We have a moratorium" on new nuclear facilities. In the time that France constructed 58 nuclear power plants, the U.S. built only one.

Engler called on Congress and the Bush administration to take a number of steps to increase supply: expand access to the oil and natural gas resources on the federal Outer Continental Shelf (OCS); open the Arctic National Wildlife Refuge (ANWR) to drilling; expedite the permitting process for new LNG, nuclear power and coal-fired plants; remove the obstacles for constructing new refinery capacity; transform a system of locally planned transmission facilities into a modern interstate grid under the authority of FERC; authorize the construction of new nuclear plants to generate 50,000 MWs of nuclear energy by 2020; ease the restrictions with respect to clean coal technology; and promote alternative fuels.

"The OCS has over 420 Tcf of technically recoverable natural gas resources and 102 barrels of oil -- enough natural gas to heat 100 million homes for 60 years, and enough oil to drive 85 million cars for 35 years. That is enough oil to replace current Persian Gulf imports for 59 years," he said.

"ANWR and its vast reserves [are] ready to be explored," Engler said, adding that ANWR was a "necessary part" of the nation's energy portfolio.

The House earlier this month stripped expanded OCS development and ANWR from its $50 billion deficit-reduction package, dashing hopes that Congress will act on the two energy measures this year (see NGI, Nov. 14).

As for expediting the permitting of new energy infrastructure, he noted that the Pentagon was permitted in a few months and was built in a year and a half; the Hoover Dam was built in two years; and the Empire State Building was built in 13 months. "We need to go back and recapture some of that energy ourselves when it comes to bureaucratic inertia and overcome that."

The run-up in natural gas prices has taken its toll on the manufacturing sector this year, Engler noted. Every time gas prices go up just one dollar, costs at Dow Chemical's plastics plant in St. Charles, LA, increase $100 million a year, he said. "This year for the first time, Dow's energy costs are expected to exceed 50% of the company's overall sales."

Pine Hall Brick of Winston-Salem, NC, reports that its natural gas bills have shot up $700,000 a month, and that it will have to close down a major part of its operation and lay off half of its workforce in January to stay in business, according to Engler. The grocery chain Food Lion is spending an additional $24,000 a day simply because the cost of plastic grocery bags has gone up.

"High energy prices have been a primary factor in the loss of 1000,000 jobs in the chemical industry alone. The forest and paper industry has closed 200 mills and lost 146,000 jobs since the run-up in natural gas prices began. Jobs have gone overseas," where energy prices are significantly lower.

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