Republican News

Feb 26 2003

DOMENICI BLAMES INSUFFICIENT PRODUCTION, NOT GOUGING,FOR RISING GAS AND OIL PRICES

Urges caution in making allegations of market manipulation

Washington, D.C. – Allegations of price gouging in the natural gas market appear to be based in frustration, not facts, Senate Energy Chairman Pete Domenici said today. He urged caution and careful consideration before making such allegations, noting that expert witnesses at yesterday’s hearing on natural gas prices all blamed tight supply and dropping production for high prices. Chairman Domenici’s statement: “This week, wholesale natural gas prices jumped 38 percent in one day. The spot markets jumped even higher. Wholesale natural gas prices are at $7.15 per mmbtu. Crude oil is trading at $37 a barrel. “We’ve been down this road before. We were here two years ago. Prices were just as high, driven by rising demand and tight supply. “Now, two years later, we face the same scenario. In the interim, domestic production of natural gas has declined even further. “I understand the frustration and anxiety that prompts allegations of gouging and price fixing. The natural gas market has been deregulated and is a free market. The Commodity Futures Trading Commission continues to monitor the market for manipulation. Meanwhile, the Federal Energy Regulatory Commission is taking action to ensure the integrity of gas price reporting to ensure consumer have accurate market information. These actions are responsible and prudent. “However, I am extremely skeptical that there is any truth to these allegations. Experts who testified before the Senate Energy Committee yesterday agreed that oil and gas supplies are tight because consumer demand is up, U.S. production is down and inventories are at record lows. In a free market, when demand is up and supplies are down, prices soar. “The witnesses at yesterday’s agreed that prices will remain high until additional supplies are provided or demand declines. “Insufficient production is our core problem; allegations and rumors are just a temporary distraction. If we want to stabilize energy prices, we must produce more energy. “The United States has the sixth largest reserve of natural gas in the world. We have vast, untapped reserves on federal lands, on the North Slope of Alaska and in the Outer Continental Shelf. If we want to stabilize prices now and in the future, we must produce more of our own natural gas. “If we don’t, we will visit this scenario again and again. The use of natural gas in the production of electricity in this country is expected to double in the next several years. Virtually every power plant we’re building relies on natural gas That means these crises in supply and price will only get worse if we don’t act swiftly and decisively. “I am committed to passing a comprehensive energy bill that will provide affordable, reliable and clean energy for all Americans. At the very least, we must give the President an energy bill that will increase our own domestic production.” ###