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As Prices Climb, ACC Urges Congress to Rethink Moratoria

With crude oil prices above $105 a barrel and natural gas prices nearing $10/Mcf, a group of chemical manufacturers Friday called on Congress to look again at lifting the moratoria on drilling off the East and West Coasts.

"We strongly urge lawmakers to support legislation such as the National Environment and Energy Development (NEED) Act," a House bill that seeks to lift the congressional and presidential moratoria on offshore natural gas production, giving states the right to drill off their coastlines, said Jack N. Gerard, president of the American Chemistry Council in Arlington, VA.

The measure (HR 2784), first introduced by Reps. John Peterson (R-PA) and Neil Abercrombie (D-HI) in June 2007, would permit natural gas activity beyond 100 miles of a state's shoreline if the state has passed a law approving drilling. It would direct a portion of the royalties to producing states, various environmental restoration projects across the county, the Low-Income Heating Energy Assistance Program, weatherization programs and research and development for alternative and renewable energy (see NGI, June 11, 2007). The bill has been pending in the House Subcommittee on Energy and Mineral Resources since last June but has yet to be given a hearing.

"This week's sky-high energy prices signal that Congress has much energy work left to do. We welcome lawmakers' attention to energy diversity and efficiency -- policies we have long supported. But domestic energy supply is a vital missing piece [that] Congress ignores at America's cost. Congress can help prevent further damage by looking again at moratoria on domestic energy development," he said (see related story).

Industrial, commercial and residential consumers "pay dramatically more for natural gas when federal energy policy keeps restriction on our own domestic supplies -- the only industrialized nation in the world to do so," Gerard said. Since 1999, he estimated that the cumulative increase in the nation's gas bill has been more than $522 billion, or $4,568 per taxpayer.

The U.S chemistry sector has lost more than 118,000 jobs and the manufacturing sector as a whole has lost more than three million jobs as a result of higher energy prices, he said.

Gerard further noted that natural gas plays a "prominent role" in reducing greenhouse gas emissions, a major focus of Congress now. "It's used for cleaner electricity generation, cleaner transportation fuels, hydrogen for fuel cells and as a key feedstock for chemistry used in products to improve energy efficiency...Increased access to domestic natural gas supply should be a key feature of any climate policy that Congress considers."

The chances that the moratoria on drilling will be lifted anytime soon appear slim, given the anti-oil and gas sentiment among Democrats in both the House and Senate. Efforts by Peterson and other House Republicans to remove the controversial drilling ban last year were shot down.

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