Senate Energy Bill Update #10 (Gas Gap)

May 28, 2003
12:00 AM
Our last update highlighted the need for the Administration to support the Alaska Natural Gas Pipeline provisions in the Senate energy bill. That project is the most meaningful thing S. 14 does to ensure a new long-term supply of natural gas for American consumers, and it will be a significant step in closing the gap between projected supply and demand of domestic natural gas. But an Arctic gas pipeline is a long-term step; America consumers also face a serious short-term gas supply problem (see Washington Post article No Help for Natural Gas Users). Senate Democrats believe that the Bush Administration needs to act now to address this near-term problem of continuing high gas prices and the possibility of severe price spikes later this year. In a letter yesterday to Energy Secretary Abraham, 30 Senators complimented the Secretary for seeking solutions from his industry advisors on how to stabilize natural gas markets; however, their letter identifies additional steps the Administration should take immediately to make a difference in natural gas supply and prices, this summer as well as this coming fall and winter. Here is the letter: May 27, 2003 The Honorable Spencer Abraham Secretary U.S. Department of Energy 1000 Independence Ave., SW Washington, DC 20585 Dear Secretary Abraham: We are writing to express our concern about continued high natural gas prices, the impact on industries that rely on natural gas for manufacturing, and the possibility of severe price spikes recurring later this year. In your recent address to the National Petroleum Council, you correctly pointed out that the amount of natural gas in storage is unusually low and that injection rates must increase dramatically in order to fill storage to levels sufficient to meet anticipated demand this year. With natural gas prices twice as high as they were last year and the increased demand for electricity expected this summer, market fundamentals are not encouraging for robust storage refill rates. We commend you for focusing on the near term challenges we face with respect to natural gas and for calling an emergency meeting of the National Petroleum Council next month to identify actions that can be taken immediately to ease short-term supply constraints. The expertise of the NPC’s members in the production, transmission and distribution of natural gas should be very helpful. Increased natural gas supplies are needed of course and, in fact, drilling is up thirty percent this year. But significant new gas supplies are not likely to come on line in the near term. Energy efficiency and conservation, as well as fuel switching, are more likely to make a difference in natural gas markets this summer and next winter. Analysis of the successful efforts of California to reduce electricity consumption in 2001 demonstrated that efficiency and conservation were the fastest and least costly solutions available. We urge you to cast a wider net for recommendations on natural gas including meeting with Governors, state and federal regulators, industrial and commercial gas consumers, electric utilities and independent generators, and experts in efficiency and conservation. We look forward to working with you to address this critical issue. Sincerely, [Signed by 30 Democratic Senators]