The natural gas industry has been lobbying hard to get incentives for additional markets put into whatever energy legislation comes out of Congress this year. Even in the Senate’s vastly reduced bill, Senator Harry Reid is pushing for a provision that establishes tax incentives for natural gas vehicle production and for installing natural gas fueling stations. This is a provision that T. Boone Pickens has been pushing for a long time.
However, a coalition of large natural gas customers including agriculture interests, food processing concerns and manufacturers of chemicals, fertilizer, glass, paper and steel, have sent a letter to Senator Reid protesting the inclusion of any measure that artificially increases the demand for natural gas. They are expressing their deep concern about the potential for significant price increases that will cause their production costs to increase and their competitive position in world markets to decrease.
Paul Cicio, president of the Industrial Energy Consumers of America (IECA), said legislating new demand would prompt increased price volatility and higher prices. Higher natural gas prices also mean higher electricity costs.
“The impact will be felt by all consumers, not just industrial users,” Cicio said. “Farmers will pay more for fertilizer, natural gas to dry their crops and electricity to run their irrigation systems; homeowners will pay more to heat and cool their homes; and manufacturers would be confronted with greater competitiveness challenges which threaten jobs at home.”
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The coalition acknowledged there is great hope that the large shale gas reserves will materialize as recoverable supplies. “However, history has shown that unforeseen circumstances, including the potential for both federal and state regulations to be placed on shale drilling, can either slow its production, increase its costs or otherwise dramatically alter these types of future projections.”
The industrial and agriculture consumers called for a coherent energy policy that balances gas demand with the economy’s need for affordable supplies.
If I was a betting man – and I have been known to make a wager or two – I would bet that the combination of the farm and manufacturing lobby will win this battle. As I often remind people who question how I can hope to win a battle against powerful fossil fuel interests, there are more energy consumers in the world than energy producers. Some of them know how to apply effective political pressure.