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November 16, 2004

BUSINESS & LOBBYING

Industry shifts strategy on natural gas

Major chemical companies are moving forward with plans to create a new coalition aligned with consumer groups to press for a legislative remedy to high prices for natural gas.

 
 

Stephen Brown, a lobbyist with the Dutko Group, which is helping to develop the coalition, said the companies want to increase their political influence by reaching out to groups outside of the industry, such as consumer and environmental organizations.

Brown said the coalition, which calls itself the Consumers Alliance for Affordable Natural Gas, has learned from failed attempts to open the Arctic National Wildlife Refuge (ANWR) to oil drilling, an effort backed most strongly by the major oil producers that stood to benefit.

“The ANWR coalition was industry-driven,” Brown said. “That was the exact opposite of how to do it.”

Companies such as DuPont, Dow Chemical, Eastman Chemical, Rohm and Haas, Crompton, and Bayer, plus several trade associations, have been working over the past year to find areas of agreement with outside groups.

“The conventional wisdom is it’s going to be major companies versus consumer and environmental groups. That’s the mold we’re trying to break here,” said Geoff Hurwitz, the vice president of government affairs at Rohm and Haas, a Philadelphia-
based company.

Maintaining stable, if not low, prices for natural gas is crucial for industries and consumers alike, Hurwitz argued. Natural gas is a “feed stock,” or an essential input for the products produced by the chemical and agricultural industries. It is also the heating fuel for 51 percent of homes in the United States.

The problem is straightforward: Natural gas demand is growing, but supply is not keeping pace. As a result, the Energy Department has estimated, residential customers will spend 17 percent more on natural gas this winter.

Brown said he believes consumer groups concerned about the cost of heating homes in the Northeast this winter and chemical companies facing rising costs can find common ground on ways to reduce the price of natural gas.

Such groups as the Consumer Federation of America, the AFL-CIO and the 60 Plus Association will become increasingly involved in the coalition, Brown said. The coalition also hopes to persuade advocates for the Low Income Home Energy Assistance Program, a federally funded initiative to help low income households pay their heating and air conditioning bills, to work with the coalition.

Hurwitz, the coalition’s chairman, added, “We’re looking at the role of efficiency in cutting demand and how that will influence price and supply. We do need more supply.”

Neil Elliot, the industry program director at the American Council for an Energy Efficient Economy, an environmental think tank, agreed: “We need to address demand-side, and do that right now, and to acknowledge we have to look at a portfolio of solutions on the [supply] side.”

Congress can do little now to bring down prices for natural gas immediately, but the long-term fixes some in the gas industry want include opening areas now off-limits to production, reducing drilling restrictions in areas only partially open to production and speeding the environmental reviews required prior to the granting of a drilling permit.

The first step the coalition will likely make is drafting a letter to lawmakers signaling that nontraditional allies are in agreement on a core set of principles, which, if implemented, would stabilize the market for natural gas.

Some lawmakers are intrigued. Sens. Tom Carper (D-Del.) and Lamar Alexander (R-Tenn.) are discussing drafting legislation.

Alexander recently held a roundtable in Tennessee with the state’s largest employers to discuss the rising price of natural gas, and he is working with the coalition to come up with options for introducing comprehensive natural gas legislation, said his spokeswoman, Alexia Poe.

On the House side, Rep. Mike Castle (R-Del.), chairman of an informal task force on natural gas, and Rep. Sherrod Brown (D-Ohio) have been approached by the coalition. Hurwitz and Brown said the coalition’s goal is to produce a stand-alone natural-gas bill.

Consumer alliance for affordable natural gas

• American Forest and Paper Association
• American Chemistry Council
• Association of American Railroads
• Bayer
• Crompton
• Dow Chemical
• DuPont
• Eastman Chemical
• Nova Chemicals
• Praxair
• Rohm and Haas
• Society of Plastic Industries


 


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