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Group warns climate change bill could lead to higher gas prices

https://www.chemnet.com   Oct 04,2007 Platts
Washington --3Oct2007 The National Gas Council on Wednesday warned that climate change
legislation in the US Senate, if passed, could cause an increase in
natural gas prices.

The bill, SB 280, which has been proposed by Arizona Republican John
McCain and Connecticut Indpendent Joseph Lieberman, is designed to reduce
greenhouse gas emissions and promote the use of alternative fuels.

But "climate change proposals inevitably compel greater demand for natural
gas," said Mike Linn, chairman of NGC and the Independent Petroleum
Association of America. "No climate change approach should be adopted unless
it includes mechanisms to assure access to [US] natural gas."

With potential changes in the energy supply mix, "natural gas will
continue to be a significant supply component and [a] leading solution to
reducing greenhouse gas emissions," Linn said.

The National Gas Council, which comprises the American Gas Association,
the Interstate Natural Gas Association of America, the Natural Gas Supply
Association and IPAA, met Wednesday in Washington to release a report
explaining how natural gas will be "a critical component in achieving
greenhouse gas emission reductions under any climate-change legislation," the
group said.

The NGC examination of the McCain/Lieberman bill won support from the
Industrial Energy Consumers of America, which said the use of Energy
Information Administration modeling in the legislation understates the demand
for natural gas and the cost of natural gas if the bill is passed.

The NGC results "are consistent with IECA's analysis that the EIA
overestimates the availability of natural gas; underestimates electric power
consumption of natural gas; underestimates the price of natural gas; and
overestimates nucear capacity additions by 2030," Paul Cicio, president of
IECA said in a statement. The net result, if the bill is passed, would be that
demand for natural gas would be significantly higher than forecasted by the
EIA analysis and additional supplies of that magnitudes "is nowhere in sight,"
Cicio said.

Cicio said the NGC study is a "wake-up call" to Congress that the EIA
modeling assumptions need to be revised and that Congress must urgently
address the need to increase natural gas supplies.
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