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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: regli who wrote (42863)	12/15/2005 2:31:04 PM
From: mishedlo	Respond to of 116555

High Gas Prices Forcing Offshore Moves Midland, November 09, 2005 -- Andrew Liveris, president and chief executive officer of The Dow Chemical Company, testified today during a House Appropriations joint sub-committee hearing in Washington, D.C. on the impact of high and volatile U.S. natural gas prices on the nation's energy consumers, particularly the chemical industry. Representing Dow and the American Chemistry Council (ACC), Liveris appeared before the House Sub-committees on Appropriations for Energy and Water Development; Interior, Environment, and Related Agencies. He urged government action to address "one of the worst energy crises in American history." During his oral testimony, Liveris said that over the past six years the price of U.S. natural gas has risen to record high levels - and become uncompetitive with the rest of the world. "The price of natural gas, once $2 per million Btus, has recently been as high as $14, which is the equivalent of $7 a gallon for gasoline," Liveris said. "These high prices are felt acutely by all manufacturers, particularly the chemical industry, which relies on natural gas both to power our plants and as a raw material to make our products." Liveris stated that high and volatile U.S. natural gas prices are now poised to affect all natural gas consumers - industrial, agricultural and residential. "Since 1998 the chemical industry has warned repeatedly that the U.S. is facing a natural gas crisis, and now the impact is being felt by all Americans," Liveris said. "With winter fast approaching, the government warns that homeowners who rely on natural gas for heat -- about 52 percent of the nation's households -- can expect a 41 percent average increase in their home heating bills." During his testimony Liveris also said that, like other U.S.-based manufacturers, Dow has been forced to take aggressive action to mitigate the impact of high and volatile energy and feedstock costs, including: improving the company's energy efficiency by 42 percent since 1990; raising product prices; shutting down 23 inefficient plants in North America; and shifting some production overseas to regions of the world where energy prices are lower. Liveris emphasized that recent U.S. natural gas price spikes have been caused by government policies that increased demand for domestic natural gas yet limited access to the nation's natural gas supplies. He encouraged government action to balance these energy policies -- in order to address the root cause of the U.S. natural gas crisis and to make the nation more attractive for future industry investment. "I want our company and our industry to invest in the United States," Liveris said. "The decisions (Congress) makes over the next days and weeks will determine if we are able to do so." Liveris concluded his testimony by recommending specific actions that Congress can take to further address the U.S. natural gas crisis, including: Supporting the Offshore State Options Act in budget reconciliation, giving coastal states the option to allow environmentally responsible energy production -- along with a share of the revenue. Providing $10 million to begin funding the energy efficiency public education campaign called for in Title I of the Energy Policy Act of 2005, as also recommended by the Alliance to Save Energy. Funding incentives for innovative energy technology to diversify this nation's fuel portfolio. Funding restoration of the damaged natural gas processing facilities along the Gulf. Conditioning funding of hurricane recovery projects on achieving maximum efficiency in the generation, transmission and use of electricity. chempoint.com