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The natural gas crisis: Greens engineer another disaster

By Alan Caruba
web posted August 11, 2003

Most Americans don't know it, but the price of natural gas has increased as much as 700 per cent in the last three years. That's what happens in the marketplace when an essential commodity becomes scarce. It's not that there aren't huge amounts of natural gas. The problem is that access to it has been effectively blocked.

"We're not running out of natural gas, and we're not running out of places to look for natural gas," says Keith Rattie, president of Questar, an energy developer. "However, we are running out of places we are allowed to look for gas."

Why do you think that is? Perhaps it is the same reason that the Clinton-Gore administration put some of the richest supplies of high quality coal off limits to development and fought access to the oil reserves in Alaska? In the case of natural gas The Bush administration's Secretary of Energy, Spencer Abraham will tell you that environmental restrictions have put nearly half of the huge natural gas reserves on federal lands off limits to use. When the laws concerning federal lands were first written, they included the sale of natural resources. It was understood they were integral to the economy. Environmental laws forbid it. That's why thousands of acres of our national forests just burn to cinders every year.

Another invaluable instrument Greens use to deter access to natural gas is the Endangered Species Act. It has been used in the past to decimate sectors of the timber industry, mining, and ranching. On December 16, 2002, the Forest Guardians, together with the Chihauhuan Desert Conservation Alliance, and the Texas Public Employees for Environmental Responsibility, delivered notice to the US Fish and Wildlife Service that it intended to sue in order to protect the "critical habitat" of the Aplomado Falcon. This bird's habitat extends from southern Arizona, throughout half of New Mexico, and into west and south Texas. If successful—and these suits have been successful in the past—it will shut down any drilling for natural gas and, of course, any other energy source. For a single species of falcon! At a time when this nation needs natural gas (and oil) now and will need more in the future!

So we have plenty of natural gas (as does Canada) but environmental laws have so slowed new domestic and offshore drilling for it that there's his little problem. According to Andrew Weissman, chairman of the Energy Ventures Group, there is "a staggering shortfall, with profound implications for energy companies and for the health of the US economy." This shortfall is going to drive the price of natural gas through the roof, as if it hasn't already done so. It may force industries to shut down in order to insure homeowners and apartment dwellers do not freeze in the event of a long, cold winter.

"Further, this growing imbalance between available supplies of natural gas and expected demand is not likely to be short-lived. Instead, it reflects the early stages of a long-term structural imbalance, in which supplies of natural gas available to the US market are likely to consistently fall 10 per cent or more below the levels achieved during the 1990's, at the same time that the underlying rate of demand is likely to continue to increase every year."

Supply and demand is the oldest rule of the marketplace and energy experts are telling us we are just a few months away from a full-fledged disaster. Let's have a big round of applause for all the environmentalists—Greens—who have engineered this. As if the US wasn't already broke, having spent its way through a huge surplus, we now are staring at a major crisis involving one of the most key elements of heating and energy for large sectors of the nation.

As Anne Keller, a senior consultant with Jacobs Consultancy, Inc., recently told other energy experts, "It seems that we are doomed to re-live the 1970's." She recalled for them that, in the 1950's, the US Supreme Court imposed federal regulation over the price of natural gas sold into the interstate markets. When the oil prices spiked in the 1970's, thanks to our dear friends, the Saudis, the power industry began to switch heavily to "cheap" natural gas.

After the winter of 1977-78, an especially cold one that saw curtailments of gas deliveries to schools and hospitals (but not inside states where gas prices had been deregulated), a whole new bunch of regulations were implemented to provide incentives to develop new gas as well as to restrict the use of gas as a fuel in power generation, i.e., electricity. Ms. Keller notes that the natural gas market did enjoy a kind of golden age with "fairly stable prices at levels low enough to encourage industrial development, and provide assurance that the (energy) industry could support another round of gas-fired power plant development."

It will probably take another crisis to get the government to facilitate new natural gas development, the financing of new pipelines, and whatever else it will take to heat grandma's house. Right now, as this is being written, stored natural gas supplies are at the lowest level since the federal government started keeping records more than a quarter century ago. Meanwhile, the Energy Information Administration is predicting that the demand for natural gas will increase by 50 per cent over the next twenty years, but that domestic production will grow by only 14 per cent unless restrictions on public lands are ended.

In an article by James M. Taylor for Environment & Climate News, my friend Robert Bradley Jr., president of the Institute for Energy Research, Houston, was quoted, noting that "The first point is that natural gas reserves in both the US and Canada are at all-time highs. Mother Nature is not to blame for high prices. Lagging infrastructure is at fault, from wellhead production to pipeline capacity to move supply to markets." You don't build infrastructure when you have to battle endless environmental regulations and laws suits by environmental groups.

In plain words, this is a train wreck about to occur and a particularly bad winter will only worsen its impact on the US economy. Without adequate energy resources, this nation will be in big trouble and a natural gas crisis will ripple through Wall Street and all other sectors of the economy.

While the Greens continue to tell you about how dangerous it is to breathe the air and drink the water, and how many endangered critters there are, your natural gas bill, if that's what you use to heat your home or business, is about to go through the ceiling into the stratosphere. You might want to hug an environmentalist to keep warm.

Alan Caruba is the author of "Warning Signs" (Merril Press) and writes a weekly column posted on the Internet site of The National Anxiety Center. © Alan Caruba 2003

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