Natural Gas Crisis Looms Ahead

Natural gas pipelines, 6-13-03
Natural gas shortages and price spikes, if not dealt with in the years ahead, could threaten Americans' livelihoods and quality of life and force energy-dependent industries and jobs oversees, a Republican congressional task force says.

The report, issued Tuesday, paints a sobering picture of economic tough times ahead if "the growing imbalance between the supply and demand for natural gas" is not corrected. "Our current supply chain is near the breaking point," it says of the country's natural gas production.

The report, which focuses heavily on the need for increased development of gas resources and gives short shrift to conservation, was released as lawmakers were moving toward approval of the first overhaul of America's energy agenda in a decade.

According to the report the problems facing the gas industry stem from too many regulations, not enough incentives to produce on federal lands and the inability to adequately identify where the most lucrative gas resources are located. Some of these issues will be addressed in the energy bill, while others - such as whether to develop gas in coastal waters now off limits - will have wait, authors of the report said.

The conclusions of the task force, which was assembled by House Speaker Dennis Hastert in July, are certain to come under criticism from Democrats, who have maintained that congressional Republicans are intent on promoting a political agenda of drilling in environmentally sensitive areas now off limits, including much of U.S. coastal waters.

While the report does not address specifically the need to lift drilling bans that now cover most of U.S. Outer Continental Shelf, it makes clear that current limits on exploration and development should be re-examined.

The GOP task force concludes that fixing the natural gas supply problem will require measures beyond what are being considered in the pending energy legislation, including lifting some of the development restrictions now in place, according to a summary document and sources familiar with the entire report.

The report criticizes years of accepting "schizophrenic policies" that on the one hand promoted natural gas use because of its environmental benefits and on the other restrict its development because of environmental concerns.

Fixing the problem will be a long-term job, the task force says, reflecting a similar conclusion in a report issued last week by a group of oil and gas industry executives who advise the Energy Department.

"There are few viable options available to us in the short term to forestall inevitable economic pain for millions of Americans," Reps. Billy Tauzin of Louisiana and Richard Pombo of California, the co-chairs of the task force, write in a cover letter to the report.

The GOP group urges streamlining of federal oil and gas lease programs and an easing of the permit process, and calls for programs that promote North American gas development, including Alaska's massive gas resources.

"Our findings are stark," Tauzin and Pombo write. "The United States is on trajectory towards an energy future which threatens Americans' livelihood and quality of life, and puts at peril our national manufacturing and industrial base."

"Without radical correction the present course will have far-reaching impacts on our economy (including)…a massive outflow of energy-dependent industries and the jobs they support," they write.

Hastert had directed a review of what he called an impending natural gas crisis so that Congress could respond with legislation. Last spring and early summer gas was selling at more than $6 a thousand cubic feet at wholesale and the Energy Department warned that gas inventories were at dangerously low levels. Shortages were possible this winter, the department said.
By H. Josef Hebert