Another shoe dropped Tuesday in the debate over creating national subsidies for natural gas used in vehicular transportation as the large manufacturing sector expressed strong opposition to a proposal released earlier this month in the U.S. Senate (S 1863) to expand tax credits for gas transportation infrastructure and vehicles (see Daily GPI, Nov. 17). At the same time, industrial users struck back against potential widespread U.S. exports of gas.
The Industrial Energy Consumers of America (IECA) urged Congress to consider updating the Natural Gas Act on future exports and objecting to the bipartisan proposal, the New Alternative Transportation to Give Americans Solutions Act of 2011 (NATGAS Act). IECA called the latter a case of Congress trying to pick winners and losers “by creating a consumer tax subsidy that will drive increased demand for natural gas in the transportation sector.”
For the most part, IECA members are large industrial businesses that depend on large quantities of natural gas and electricity for their business operations and are highly sensitive to price swings in the fuel. They see potential widespread gas exports as threatening to tighten now-plentiful domestic supplies and drive up prices.
Noting they are not opposed to the use of gas for transportation, the IECA members said they are against tax subsidies that “distort the marketplace at the expense of consumers. This is not the time to increase taxes on taxpayers who are struggling in an uncertain job market and economy.”
IECA’s communications emphasized that its members are among the nation’s largest consumers of gas and gas-fired electricity, calling gas availability and price matters of public health, safety, jobs and the economy. With the almost overnight switch to plentiful domestic gas supplies, IECA is also urging Congress to update the Natural Gas Act, and to that end, the group sent a letter to the ranking members of each party on the Senate Committee on Energy and Natural Resources, Sens. Jeff Bingaman (D-NM), the committee chair, and Lisa Murkowski (R-Alaska).
IECA is not opposed to exports, but it told the senators it has “concerns” about the approval process regarding permits to export liquefied natural gas (LNG). “Consuming domestically produced natural gas to make value-added products here and ship them offshore is a better alternative for manufacturers and the country,” said the letter sent by IECA President Paul Cicio.
For the proposed gas transportation bill, the group wrote directly to the overall Senate leaders, Sens. Harry Reid (D-NV), the majority leader, and Mitch McConnell (R-KY), the minority leader. They argued that a tax subsidy is not needed to increase demand, and it would drive up the cost of farm products as well as the cost of natural gas and electricity.
At both the federal and state levels activity has picked up surrounding both developments that are prompted by the surge in domestic gas supplies as an offshoot of the shale plays. Oil billionaire T. Boone Pickens has been pushing the NATGAS Act in the House of Representatives and more recently a group of state governors has banned together to promote the use of gas vehicles in governmental fleets (see Daily GPI, Nov. 10, April 15, 2010).
Late last month the nation’s first Gulf Coast LNG export deal was struck between Cheniere Energy Partners LP and its Gulf Coast LNG facility and BG Group (see Daily GPI, Oct. 27). Cheniere struck its second deal in recent days (see Daily GPI, Nov. 22).
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