Manfuacturers Concerned C02 Cap Would Lead To (Natural) Gas Price Surge
>>>CO2 cap and trade leading to a tripling of NG prices!?!?!?! I told you. I told you. Watch the politicians and 'what destruction they have brought upon the earth.' (Anybody get that reference.) Do I need to invoke Mayer Rothschild or Newton and 'action and reaction' again??? Buy that Canadian gas.<<<
DOW JONES NEWSWIRES
May 14, 2007 1:33 p.m.
By Maya Jackson Randall
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--Chemical manufacturers and other businesses dependent on natural gas are concerned that congressional efforts to curb global warming will only hurt industrial firms by dramatically boosting demand for natural gas.
That said, the Industrial Energy Consumers of America and other business coalitions plan to launch a communications effort to warn U.S. lawmakers that the so-called cap and trade climate policies most favored on Capitol Hill could lead to gas prices that are double or triple what they are today.
Those higher prices could further hurt manufacturers who have already been closing plants and losing jobs since a natural gas crisis began in 2000, says Paul Cicio, IECA's president.
Cicio argued that while some "flawed" federal data paints a rosy picture of future gas supplies, the truth is that the natural gas market is too fragile to support the higher demand that would come with greenhouse gas emissions mandates.
IECA argues that mandatory reductions in greenhouse gases would spur greater demand for natural gas because it is a fossil fuel that emits far less carbon dioxide into the atmosphere than coal when burned to produce electricity.
"Given a mandate ... there would be a significant increase in demand," Cicio told reporters at press briefing.
The way to address climate change is not through policies that would boost use of natural gas but by reducing use of fossil fuels through conservation and pro-renewable and nuclear energy programs, he told reporters at a press briefing.
"Congress must take action to diversify the fuel use, particularly by the electric utility industry, away from natural gas," he said. "Cap and trade as a policy doesn't reduce the government or technological barriers to low-carbon energy."
The group's concerns come as key members of Congress are backing cap and trade programs as a major solution to global warming.
Many proposals being floated on Capitol Hill would establish the nation's first "cap and trade" program for regulating emissions of carbon dioxide and other heating-trapping pollutants thought to lead to climate change.
Under a cap and trade program, greenhouse gas emissions would be capped and polluters would buy or be given credits to correspond with the amount of pollution they can emit. Companies that exceed that limit would have to buy credits from other companies that emitted fewer greenhouse gases.
Cicio argued that the gas supply outlook looks bleak as Canadian gas imports to the U.S. decline further and a major Alaska natural gas pipeline project that could ship stranded North Slope supplies to market faces new obstacles.
Although Congress last year opened new areas in the eastern Gulf of Mexico to energy development, "we're not going to see any meaningful supply for five years" from that area, he said.
He added that even a future cap on greenhouse gas emissions that wouldn't start until 2015 would still impact manufacturers today.
That's because electricity companies would factor in the new emissions limit and invest in new gas-fired power plants, which would increase demand and prices, said Cicio.
Meanwhile, Andrew Weissman, the publisher of Energy Business Watch and senior energy advisor of FTI Consulting Inc., said he's concerned that lawmakers are backing bad climate policies, partly because they are relying on data from the Energy Department's statistical arm.
Weissman argued that the Energy Information Administration's forecasts are based on unrealistic assumptions about the natural gas market.
Congress is relying on "bad information" from the Energy Information, said Weissman. "Year after year, their estimates are drastically off the mark."
Weissman blamed the "flawed analysis" on an understaffed energy forecasting office and a budget that's repeatedly slashed.
An EIA director was not immediately available for comment.
If Congress uses the projections to determine that there is adequate supply to support any new climate policies that would increase gas use, it will lead to bad climate policies that would only increase gas prices, Weissman said.
"What EIA has been doing is presenting Congress with a series of analysis that are essentially pie-in-the-sky," he said. |
