In the wake of President Clinton’s release of crude oil from theStrategic Petroleum Reserve (SPR) to mitigate heating oil pricesthis winter, Chairman Frank Murkowski (R-AK) of the Senate Energyand Natural Resources Committee yesterday asked Energy SecretaryBill Richardson whether the administration had anything up itssleeve to reduce natural gas prices as the industry enters thewinter heating season.

“There’s no SPR for natural gas,” Murkowski reminded Richardsonduring a Senate oversight hearing Tuesday on the outlook for winterfuels. “We’re already too late” to help gas consumers this winter,who are looking at increases in their bills of up to 50%. “So thepressure’s going to be on natural gas…..That’s where the nexttrain wreck is coming,” he said. He estimated about 50% of thehouseholds in the United States use gas as a home-heating fuel, andabout 14% of utilities depend on gas to generate electricity. Thisstepped-up demand is squeezing supply. “We’re using now for thefirst time our gas reserves faster than we’re finding newreserves.”

Sen. Pete Domenici (R-NM) predicted the “next crisis for Americaunequivocally will be [that] we don’t have enough natural gas,” andit will likely occur this year — if it hasn’t begun already.Industry, however, insists there will be sufficient gas supply tomeet demand this winter. Domenici warned gas consumers to “holdonto your pocketbooks because [they] ain’t seen nothing yet” withrespect to gas prices, which he believes will go “through theroof.”

He blamed Department of Interior (DOI) policies that restrictexploration and drilling on public lands, and EnvironmentalProtection Agency (EPA) rules and regulations that favor gas overcoal for generating electricity for the supply imbalance affectingnatural gas.

Contrary to popular belief, the “energy policy of the UnitedStates is made by [the] Interior Department” rather than theDepartment of Energy (DOE) “because they determine what lands canbe entered for drilling for oil and gas,” Domenici said. The EPAalso is “greatly involved” in the development of energy policy.

Currently, there are no Interior policies that are”pro-development” of oil and gas, Domenici said, adding that 60%more federal lands are off-limits to producers today compared to1983. Also, EPA emissions rules have made it nearly impossible toconstruct generation facilities that aren’t fueled by natural gas,he noted. It’s been 10-20 years since a new coal-fired facility wasbuilt.

So “we are hell-bent to use natural gas…..We’re limitingAmerica to that kind of energy [gas]” rather than a broad-based mixof sources, Domenici noted.

There was a lot of finger-pointing at the hearing as to who wasat fault for the “energy supply train wreck…..on the horizon,” asMurkowski called it. He accused the Clinton administration of being”asleep” at the wheel, and not recognizing the “severity” of theprice and supply problems facing the natural gas, electricity,crude oil and gasoline markets. The fact that the administrationhad to tap the SPR this early “clearly” sends the message to theU.S. public that “we’re in trouble. We’re now having to go into oursavings accounts, so to speak.”

Specifically, Republican members of the committee rappedadministration policies that ban or severely restrict drilling onpublic lands, support environmental rules that are slanted againstcoal or other non-gas fuels for generation, and the lack of anenergy policy for the current energy market constraints. Theyfailed to note that Congress itself has supported and approvedmortoria that have placed large portions of the offshore off-limitsto producers.

Democrat committee members, as well as Richardson, counteredwith their own laundry list of flops by the Republican-led Senateand House. Topping the list was Congress’ failure to passelectricity restructuring legislation and the administration’spackage of tax incentives for marginal oil and gas production andrenewable energy sources, and reauthorization of SPR.

The coolest head that prevailed Tuesday was that of Sen. TimJohnson (D-SD). “I’m appalled at the kind…..[of] harsh partisanattack rhetoric” at this hearing. “I for one don’t believe eitherpolitical party has particularly distinguished itself on energystrategy for a long, long time,” he told his colleagues on thecommittee.

“It seems to me with Republican control of both houses ofCongress for six years…..there’s a little bit of finger-pointingthat can go in both directions.” If the Senate panel would spendmore time focusing on “constructive energy policy” instead oftrying to lay blame, “I think the American public would be betterfor it,” Johnson said.

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