Congress Must Stay Focused on Solving Our Nation's Natural Gas Crisis.

Increasing the Flow

by W. Henson Moore

One of the most challenging aspects of our job at the national trade association for the forest and paper products industry is keeping lawmakers focused on the issues important to our members. We try to draw attention to the problems we think Congress can, and needs to, help with. Of course, every other interest group in the country is doing the same thing on issues of importance to them, and it is easy to get lost in the clutter.

This year may be harder than most to keep lawmakers focused; it is an election year, and although Americans will not be electing a new President, these mid-term elections will be closely watched and analyzed because they will set the tone and early expectations for the Presidential race of 2008.

Furthermore, there are seemingly weekly distractions for lawmakers—scandals involving Administration officials, Members of Congress, and well-known lobbyists—and then there is the business of running the country—the war on terror, keeping the economy moving forward, and more.

All of this adds up to one short legislative year for us here in Washington. Nevertheless, we are facing a major energy crisis that goes beyond our over-dependence on foreign oil the President spoke of in his State of the Union address, and Congress needs to act.

According to what my members are telling me, there is no more pressing issue for our industry overall, than skyrocketing natural gas costs. On average our industry relies on natural gas for about forty percent of its purchased energy, and in the past few months the cost of natural gas has jumped to more than seven times the historic average. Some of those price spikes were temporary—caused by the impact of the violent hurricane season we endured last year and, while unwelcome, they were not entirely unexpected. But even absent the hurricanes, natural gas prices were unnaturally high, averaging almost seven dollars per million BTUs for the first six months of 2005. That is about three times the price from just six years earlier.

The problem is a fairly simple one—too much demand, not enough supply, and our government policies have been, and continue to be, exacerbating both ends of the problem. For several decades our government, particularly through the Clean Air Act, has been pushing industries into “clean, affordable natural gas.” Natural gas became the wonder energy source—supplies were plentiful and greenhouse gas emissions were reduced by 30 to 40 percent over other fossil fuels, and the price was right—under two dollar per million BTUs.

But while our nation's regulatory agencies like U.S. EPA and the U.S. Department of Energy were pushing, dragging, and pulling industries and homeowners towards natural gas, Congress was severely restricting the ability of the energy industry to keep up with demand. They placed a moratorium on exploration of our coastal regions—the outer continental shelf (OCS)—an area rich in natural gas deposits. Additional restrictions were placed on exploration for natural gas in the vast public lands of the U.S. west, and further hurdles were erected to slow the development and placement of specially designed shipping terminals to facilitate the safe importation of natural gas from other countries.

These policies-increasing demand, restricting supply-are clearly at cross-purposes, and they are hurting, not only the forest and paper products industry, but our entire country. Homeowners are seeing higher heating bills this winter, cities and businesses utilizing natural gas-powered vehicles for their fleets are seeing savings evaporate, and the entire manufacturing community is suffering.

Unnaturally high natural gas prices are hammering our competitiveness, and the trend of reduced production and closing mills may well continue if something is not done.

That is why I am asking for your help in keeping Congress and the Bush Administration focused on our natural gas crisis this year. Our industry, and the entire manufacturing community, needs to come together to say “stay focused on our natural gas crisis.” There is no single solution, but we need to keep the pressure on our politicians. They need to act now, while we still have a manufacturing base in this country. Join us this year in making sure Congress and the Administration realize unnaturally high natural gas prices hurt us all.

W. Henson Moore is president of the American Forest & Paper Association.

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