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Farmers, Chemical Companies, Schools, Associations Urge Congress to Increase Gas Supply

Farmers from Iowa, school representatives from North Dakota, chemical manufacturing officials from Illinois and pulp and paper workers from Louisiana were paraded up to a news conference microphone last Wednesday to tell their stories about how high natural gas prices have hurt business. The Consumer Alliance for Energy Security wants Congress to know there is pain being felt in every sector of the economy and new legislation should be passed to lift offshore drilling moratoria and increase gas supply.

"Our industry has lost 189,000 jobs since natural gas prices started shooting up six years ago and none of my colleagues want to be next," said Randy Bowen of the Pulp and Paperworkers' Resource Council in Bastrop, LA. "Congress should act now to put more American natural gas to work protecting American jobs."The alliance called on Congress to act on pending proposals to provide greater access to gas on the Outer Continental Shelf (OCS). They cited a total loss of more than 3.1 million manufacturing jobs since 2000 when energy prices began increasing dramatically.

At a "Policy Insiders Meeting" sponsored by the U.S. Chamber of Commerce Wednesday, Senate Majority Leader Bill Frist (R-TN) signaled that legislation seeking to open up the natural gas-rich eastern Gulf of Mexico would be a high-priority item on the Senate's agenda this year. Building on the broad Energy Policy Act of 2005 that Congress passed last summer, "I think the next step would be looking at something like [the] Domenici-Bingaman approach" to open up the area known as Lease Sale 181, he said.

The bipartisan bill was crafted by Sen. Pete Domenici (R-NM), chairman of the Senate Energy Natural Resources Committee, and Sen. Jeff Bingaman of New Mexico, the ranking Democrat on the Senate energy panel. It was voted out by the committee in March. "It's ready to come to the floor. I haven't announced a floor time, but it would be the next energy bill that we consider," Frist said.

"America is suffering an energy crisis, which is hurting our economy and threatening our jobs," said John Engler, CEO of the National Association of Manufacturers. "In order to compete and succeed in the global marketplace, our country needs a plentiful, diverse and affordable energy supply. With our manufacturing base and our communities at risk, it's time to reduce costs and expand supplies."

The alliance released the results of a national opinion survey that it said confirms that the American public understands the severity of the U.S. energy crisis. The survey found that nearly 90% of the respondents believe that rising energy costs are having a significant impact on their family's monthly budget. In addition, nearly 60% of those polled support accessing the abundant supply of domestic energy available on the OCS.

"Every single American is feeling the pain of high energy prices. After the warmest winter on record, consumers' heating bills are still up an average 23% this year for natural gas and 24% for oil," said Jack Gerard, CEO of the American Chemistry Council. "Schools, hospitals, churches and small businesses across the country are struggling. It's clear that America's competitiveness, jobs and economic growth are at risk. The question is, will Congress at last take action on one of the most important issues facing our nation?"

W. Henson Moore, CEO of the American Forest & Paper Association and a former U.S. deputy secretary of energy, said that since 1990 gas demand has outpaced the increase in supply by 400%. "This is the direct result of government policies that encourage the use of natural gas and simultaneously restrict supply. We need to reduce the demand, at least temporarily, and increase the supply if we have any hope of getting out of this crisis," said Moore.

"Growers rely on affordable natural gas as a feedstock for fertilizer, but also energy for irrigation, powering farm equipment, drying grain and producing ethanol," said Samantha Slater, director of public policy for the National Corn Growers Association. "Increased natural gas prices have already had an adverse effect on farmers due to higher production costs. This trend is expected to worsen in the future. Whether used directly as a feedstock or for heat and power generation, reasonably priced natural gas is essential to grower profitability."Greg Allen, administration manager for Cavendish Farms and president of the Jamestown (North Dakota) School Board, said every $1/MMBtu increase in the price of natural gas costs his farm $545,000. "The Jamestown School District faces similar challenges," he said. "Because our supply can be curtailed, we are forced to use more expensive sources such as fuel oil. If we had greater certainty over our energy supply, we would be able to run the system less expensively and use those funds for our students."

Edgar Hatrick, superintendent of schools in Loudoun County, VA, said his school system has seen a 47% increase in average annual gas costs in fiscal year 2006. "This change will lead to a budget shortfall in natural gas alone of $537,000. "Iowa farmer Bill Northey of Spirit Lake said farmers in his state are choosing to switch some of their acreage from corn to soybeans because of the high price of nitrogen fertilizer needed to grow corn. "This puts hardworking growers at a real disadvantage when we seek to compete in the global marketplace," he said. "We need natural gas prices to fall so we can regain our competitiveness."

The alliance released an analysis that shows 85% of the gas resource on the OCS is off limits due to drilling bans put in place by Congress and despite technology that can extract the gas in an environmentally safe manner.

"There are numerous proposals currently pending in the U.S. House and Senate that would foster greater access to America's abundant energy supply," the alliance said in a statement. "The Consumer Alliance for Energy Security favors proposals that provide greater access to previously restricted supplies of natural gas on the OCS."

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