Inconsistent federal policies of encouraging natural gas use for environmental purposes and then restricting access to gas reserves are part of today’s disconnect in supply and demand, which has led to the shut-down of manufacturing plants that can’t pay the high prices, Lee Gooch, head of the Process Gas Consumers (PGC), said earlier this week.

Even with about 4 Bcf/d of industrial demand already priced out of the market, prices are still at the $5-6/MMBtu level — where they have been since January, Gooch told attendees at the LDC Forum in Atlanta, adding that he was glad to hear Federal Reserve Chairman Alan Greenspan finally recognize it as a crisis situation. A number of ammonia plants, with 90% of their total cost being the cost of natural gas, have shut down this year. Some will come back and some won’t, Gooch, who also is vice president of Potash Corp., PCS Nitrogen Inc., said.

Fertilizer manufacturers are just one of a number of industries that are mainly unswitchable “process” gas users, meaning gas is either used as feedstock or as an integral part of product processing. These users have taken the brunt of the “demand destruction” caused by the higher prices.

Gooch said the federal government needs to take a long term approach to energy use, eliminating barriers to production development, as well as encouraging infrastructure investment, conservation and use of alternative fuels.

Gooch said re-regulation was not an answer, nor is mandatory price reporting. Competition is not consistent with a single self-regulating organization (SRO), “so there’s only one price gatherer. I don’t want government to tell me how to buy gas and how to report it.” He believes the market and the pricing function will fix themselves.

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