While the Energy Information Administration (EIA), among others, has thrown in some last minute challenges to the efficacy of government support for an Alaska gas pipeline, industrial consumers Wednesday charged that the energy bill being constructed in Congress completely misses the point of how to serve the nation’s need for natural gas.

Coming from another direction, an environmental group Wednesday said the issue of the Alaska pipeline is causing a serious rift within the oil and gas industry and between the U.S. and Canada, and will mainly benefit Alaskans and several large oil companies. The position paper by the Friends of the Earth (FOE) comes on the heels of EIA’s analysis released Tuesday that federal subsidies for the pipeline would cost U.S. taxpayers $14 billion, almost as much as the estimated $16 billion consumers would save.

But the Alaska issue that has generated so much controversy does not address today’s problem.

“America is in the grips of a natural gas crisis that will get worse before it gets better and the proposed legislation does not put us on the path to correcting this serious problem,” the Industrial Energy Consumers of America (IECA) said in a letter to the chairmen of the House-Senate conference committee on the energy bill.

The IECA lists insufficient gas production, too much demand growth for power generation, not enough gas storage and barriers to the increased use of coal by utilities. Its recommendations include extending and increasing the Section 29 tax credits, placing a temporary moratorium on the use of inefficient gas-fired power plants which are not cogenerators, accelerating the drilling permit approval process, and opening up additional federal lands to drilling.

In addition the group recommends encouraging increased gas storage capacity and requiring a study on any federal mandate to determine the impact of that mandate on consumers’ natural gas prices.

The EIA analysis of the cost and savings of major provisions of the energy bill responds to that last point. Besides the cost to the government of pipeline subsidies and proposed tax credits for Alaska gas, the agency also said it would cost the lower 48 producing industry $60 billion over 15 years in lost sales revenues. The complete EIA analysis can be viewed at https://www.eia.doe.gov/oiaf/servicerpt/eleg/pdf/sroiaf(2003)04.pdf

The FOE, meanwhile, claimed that the main push for the Alaska pipeline is coming from that state’s politicians who have told Alaska residents it will mean increased royalty income for the state. The environmental group also said that two of the three major oil companies were supporting Alaska incentives and that a couple peripheral groups of independent producers were opposing them. The position paper notes that both the U.S. and Canadian administrations oppose subsidies. The complete issue paper is available at https://foe.org/powerpolitics/10.1.pdf.

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