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Analyst: Administration, Congress Have Tools to Respond to 'Natural Gas Emergency'

If Hurricane Rita significantly disrupts domestic natural gas production off the coast of Texas, the Bush administration and Congress have a number of tools at their disposal to help the energy markets and their customers recover, said energy analyst Christine Tezak. Rita, which has been upgraded to a Category Five hurricane, is poised to severely hobble oil and natural gas production in the Western Gulf of Mexico, coming just three weeks after Hurricane Katrina disrupted activity offshore and onshore Louisiana.

"We think that in the wake of Katrina, the looming threat of Rita, concerns about a cold winter in a good part of the country, borderline average storage conditions and new natural gas [price] highs, it may be worthwhile to take a look at what is in Washington's 'tool box' of responses. If any potential legislation gets bogged down [on Capital Hill], there are still quite a few things that Washington can do to help (or interfere in) the energy markets -- including rationing if a significant supply disruption takes place," said Tezak of Stanford Washington Research Group in an "Energy Policy Bulletin" Wednesday.

"If Congress decides that it thinks the nation is facing a 'natural gas emergency," she said, it could press the administration to take action (or the president can act on his own initiative) under the following laws:

With Rita headed straight for the Texas coast, "there has been much discussion of the difference in vulnerability between the Louisiana part of the energy complex and the facilities in East Texas. The latter is considered to be in a generally far better position to withstand hurricane disruption," Tezak said. Rita is expected to weaken in the days ahead and make landfall along the Texas coast as a Category Three hurricane packing winds of up to 130 miles per hour.

"If it comes to talk of price controls [for oil and natural gas], don't look to the FERC. The action will not be there. Look to the Hill and the state commissions," she said. Tezak doubts it will come to this.

The House Energy and Commerce Committee is considering offering a stand-alone energy measure in the wake of Hurricane Katrina, she said. "It's not entirely clear what all may be in a proposed bill, but we hear the list of ideas is longer than a child's letter to Santa." The focus of the bill may be on refinery construction and/or expansion, according to Tezak.

But "the Senate appears to be far less interested in moving a separate, energy-specific bill at this point. The budget hawks may have more influence in the Senate and are already balking at the price tags of non-energy Katrina related items."

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