- The Washington Times - Tuesday, March 21, 2006

Over the past several months, America has at last awakened to the natural-gas crisis. Today, it stands as one of the most important issues facing our nation.

Among its damaging consequences are the erosion of the U.S. manufacturing economy and the permanent loss of millions of jobs over the past five years. Yet until recently it was a “stealth” crisis because to most Americans — even many members of Congress — natural gas was a mysterious commodity. Its nearly ubiquitous use in manufacturing was largely unknown, as was the fact that U.S. natural-gas prices are consistently the highest in the world, putting our country at an enormous disadvantage.

From steel, aluminum, forest and paper and cement to carpet, bricks, fertilizer and my business — the business of chemistry — natural gas is vital to production. In the case of chemistry and fertilizer, natural gas is not only a heat and power source, but also a raw material. For all of these industries, when U.S. natural-gas prices double, triple, quadruple and more in a few short years, large companies and small businesses alike must close plants, lay off workers, relocate overseas or raise prices for the goods that consumers use every day.

The economic “ripple” effects are substantial: 2.9 million lost manufacturing jobs, 100,000 chemical-industry jobs, 182,000 forest and paper industry jobs, 36 percent of the U.S. fertilizer industry, billions in lost business. Consumers are feeling it, too. Despite this winter’s record warm weather, their heating bills are still 24 percent higher than last year, according to the U.S. Energy Information Administration. And they’re paying more for nearly all of the manufactured goods they buy, because nearly all manufactured goods contain some amount of natural gas.

It wasn’t always this way. In the mid-1990s, U.S. natural-gas prices were in the $2 per-MMBtu-range. Manufacturers could safely build their business around the use of natural gas. Industrial, commercial, residential and electric utility users did not “compete” for natural gas the way they do today. Policy-makers did not need to examine natural-gas policy because natural gas was affordable and available to meet the nation’s needs. If it’s not broken, don’t fix it. But with U.S. naturalgas prices hovering around $7 per MMBtu, down from $14 to $15 a few months ago (but still triple those of five years ago), now we are in a different world.

High natural-gas prices don’t “just happen.” Rather, they are a function of an imbalance in supply and demand. And one of the biggest influences on supply and demand is U.S. energy policies — policies that drive up demand for natural gas while restricting access to America’s own supplies. Policies that encourage electric utilities to use more natural gas, for example, while prohibiting energy exploration in 85 percent of the Outer Continental Shelf of the United States. This area contains vast new supplies of natural gas that could help re-balance the supply-demand picture and bring prices down. For too many years, Congress did not make the connection that creating new sources of demand while cordoning off new sources of supply was an economic disaster in the making.

In some corners of Congress, those disconnections continue. Can you believe that there is a proposal in Congress that would extend U.S. exploration restrictions out to 250 miles from Florida, while Cuba is looking for energy in waters that are barely 50 miles from Florida’s coastline? And that Cuba is partnering with China, Venezuela and other nations, some of whom even boast of using their energy access as leverage in their dealings with other countries? Is any more evidence needed that U.S. energy policy is lost at sea?

That is why it is heartening to see that enough members of Congress have begun to “connect the dots” between the causes and effects of skyrocketing natural-gas prices that they are putting forward proposals that would provide greater access to the nation’s natural gas supplies. Recently, the Senate Energy and Natural Resources Committee cleared one of these bills by a resounding bipartisan vote. It holds the promise of freeing up enough natural gas to heat 5 million American homes for 15 years, and it sends an important signal to the market that “help is on the way.” Yet given the magnitude of the problem, more must be done. We are hopeful that progress on this bill represents momentum in Congress toward enacting comprehensive naturalgas legislation that will, for the first time in 25 years, ensure reliable access to America’s own abundant natural-gas supplies.

Only by rationalizing U.S. natural-gas policy for the long-term can we put the nation on a path toward a stronger economy, more jobs and greater security.

Jack N. Gerard is president and CEO of the American Chemistry Council.

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