Interest in Gas Reserve Revived on Capitol Hill
Rep. Tony Hall (D-OH) has introduced legislation to create a natural gas reserve to help stabilize the market during times of low supply and high prices. The proposed reserve would be modeled after the Strategic Petroleum Reserve (SPR) and the Northeast Home Heating Oil reserve, the latter of which allows heating oil supplies to be drawn down during times of tight supply.
"He is going to push it [the bill]. It's a solution that makes sense" in light of the high gas prices that customers have seen so far this winter, said a press aide. A gas reserve would be "part of the long-term solution" because the federal government could buy gas when it's "cheap and plentiful, and make it available during times of shortage," Hall said in the Congressional Record.
His legislation, the Natural Gas Reserve Act of 2001 (H.R. 245), would give the Energy Secretary the authority to determine whether a gas shortage exists and a drawdown should occur.
The secretary would be authorized to sell crude oil from the SPR to cover the administrative and acquisition costs of the new reserve. In addition, the secretary would determine the size and location of the gas reserve, according to Hall's bill.
Hall believes now is the time to establish a reserve for natural gas, given that the Energy Information Administration (EIA) projects that by next month gas storage in the nation will be 40% below the five-year average.
The legislation, which is co-sponsored by Reps. Frank Mascara (D-PA) and Bernard Sanders (I-VT), "is an insurance policy for American consumers because it will provide relief during [a] national shortage," he said.
The Senate is eying similar relief as well. Last week, it called for the National Academy of Sciences to conduct a study of the run-up in gas prices and impoverished supply situation this winter, and offer potential solutions - specifically, directing it to review the feasibility of a gas reserve. This was included in an amendment to the pipeline-safety bill that the Senate passed last Thursday.
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