- The Washington Times - Monday, June 9, 2003

Policy-makers are beginning to pay attention to what industries have called “the other energy crisis” — the critical U.S. shortage in natural gas. According to Energy Secretary Spencer Abraham, natural gas storage levels are at their lowest levels in almost three decades and 42 percent below their five-year average. Meanwhile, natural gas prices have reportedly gone up by up to 700 percent since 2000.

The situation is disconcerting. Americans consume more natural gas than any other fuel besides petroleum, and demand is expected to increase steadily. “Total demand for natural gas is expected to increase at an annual average rate of 1.8 percent … primarily because of rapid growth in demand for electricity generation,” according to the Energy Information Administration’s Annual Energy Outlook 2003. Yet, given low storage levels, an increased demand in energy caused by hot summer weather could cause a surge in prices, rocking on an already teetering economy.

One of the individuals most aware of the peril posed by the natural gas shortage is Federal Reserve Chairman Alan Greenspan. He is expected to testify today before the House Energy and Commerce Committee on the potential crisis. Last month, Mr. Greenspan told the Joint Economic Committee that he was surprised how little attention had been paid to the issue. He noted that importation facilities are limited, making domestic sources the best solution. However, while policy-makers have encouraged the use of natural gas, they have constrained access to it. Mr. Greenspan argued that the “contradictory federal policy” means “something has to give. And what is giving, of course, is price.”

According to Mr. Abraham, approximately 40 percent of U.S. natural gas resources are inaccessible thanks to stringent environmental regulations on the federal lands under which they exist. Yet, other environmental regulations favor the use of natural gas over other fuel sources, such as coal and gasoline.

In the long term, Alaska’s reserves could do a great deal to remedy the shortage. The state contains at least 35 trillion cubic feet of proven reserves of natural gas, and its federal lands could contain another 59.7 trillion cubic feet in undiscovered reserves, the mean estimate of the U.S. Geological Survey. However, since there is no natural gas pipeline to transport the fuel to the lower 48, the only Americans who benefit from those vast gas reserves are Alaskans.

Both the energy bill that passed through the House and the energy bill under consideration by the Senate have provisions for a natural gas pipeline. However, green politicians are expressing their usual alarm about the pipeline’s environmental impact, and others worry about its possible fiscal impact. Senate Budget Committee Chairman Don Nickles has expressed reservations about a provision in the Senate bill establishing a price floor for natural gas, under which government subsidies would kick in if prices fell below $1.35 per million British thermal units (natural gas prices are currently in the $5 to $6 range). Even if approved, the pipeline would take up to a decade to complete, and so, while it should be built, its construction offers little in the way of short-term relief.

Congressional passage of an energy bill still would provide part of the solution, since both bills contain provisions expediting the permitting process for new natural gas wells. On the executive side, Mr. Abraham has called for an emergency meeting of the National Petroleum Council to consult on the crisis.

Ultimately, the solution to the natural gas problem can, and should, largely be found on American shores. The natural gas reserves are in place to ameliorate the shortage, but it remains to be seen if policy-makers have the will to tap into them. If the future is like the past, environmental extremists in Congress will block the extraction and delivery of clean natural gas — even as they call for its greater use in other legislation.

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