The U.S. House late Wednesday passed a nonbinding resolution opposing efforts by major natural gas exporting countries to form a cartel or other mechanism to manipulate the supply of gas and its price to the world market.
The resolution (H. Res. 500) was sponsored by Rep. Ileana Ros-Lehtinen (R-FL) and was co-sponsored by 29 lawmakers, mostly Republicans, and cleared the House by voice vote.
Domestic drilling advocate Rep. John Peterson (R-PA) criticized the gas cartel measure. “While I agree that cartels inhibit a fair economic playing field, this legislation will not reduce our energy costs or keep American jobs here,” he said.
“Ms. Ros-Lehtinen and I share the opinion that a natural gas cartel is not a good thing. Paradoxically, though, the congresswoman continues to vehemently oppose domestic production of clean, green natural gas,” Peterson said. “In fact, if we would produce natural gas on our Outer Continental Shelf, this pseudo cartel would be a non-issue altogether.”
The House action comes three months after a group of major producers met in Doha, Qatar, where it laid the groundwork for what could turn out to be the formation of another world energy cartel (see Daily GPI, April 10). At the April meeting, the 14 members of the Gas Exporting Countries Forum decided to set up a commission to assess the feasibility of establishing an exporters’ group for natural gas that would mirror the Organization of Petroleum Exporting Countries (OPEC).
OPEC works to keep oil prices high by reducing members’ production allotments when prices decrease, thus causing prices to rise again as supply tightens.
The commission, which is made up of the deputy energy ministers from major gas-producing nations, is expected to report its findings in time for the group’s next meeting in Russia in 2008. Russia, the world’s largest gas exporter, will likely take a lead role in the study of gas price formation. The forum was founded in 2001 to unite the countries that together control more than 70% of the world’s natural gas reserves. Some of the major gas-producing countries that are members of the forum include Russia, Iran, Venezuela, Qatar, Algeria, Malaysia, Norway, Nigeria, Oman, Turkmenistan, Brunei and Indonesia.
The United States opposes the creation of a gas cartel. In a letter to Secretary of State Condoleeza Rice in April, Ros-Lehtinen called on the major natural gas-consuming countries of the United States, Europe and Asia to work cooperatively to block leading gas exporters from creating a cartel-like organization for gas (see Daily GPI, April 3).
While the U.S. is largely self-sufficient in natural gas, its imports of liquefied natural gas (LNG) are projected to increase rapidly over the next few years. Europe already is heavily reliant on Russia for almost all of its gas needs and is expected to become increasingly vulnerable over the next decade. Japan, South Korea and other U.S. allies are big consumers of imported gas, and countries such as China and India are projected to rapidly increase their consumption in future years.
Energy experts doubt that a cartel-like organization for gas, even if formed, would have the same clout as OPEC. In testimony before a House committee earlier this year, Daniel Yergin of Cambridge Energy Research Associates said establishment of a gas cartel-like organization was inevitable, but he did not believe producing countries could control the international gas market in the same way OPEC has influenced global oil prices and supplies.
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